Review points to positive property sector across North West in 2021
The resilience of Manchester and the wider North West region is highlighted in the latest regional property predictions by professional services firm JLL.
It said this is demonstrated through the region’s strong residential supply, cutting edge offices, leisure, sport and continued investment in its public transport infrastructure, and it expects this to pave the way for new opportunities to be realised in 2021.
JLL’s research predicted that 2021 will see increased demand for the best office assets and prime product especially from overseas investors and that this is likely to lead to yield compression for the best product.
With regards to the industrial sector, it expects the North West industrial market to continue to stand out as one of the UK’s most sought after and cited that the lack of supply for both occupiers and investors is likely to continue to drive pricing further and may lead to reduced trading volumes in 2021.
JLL also pointed to the continued demand for index linked long income assets in the North West as investors look to match their own liabilities in the current low interest environment.
It predicted that demand for these assets and products will assist in ensuring that otherwise unviable development schemes are able to be completed.
The strong take-up levels of industrial stock in 2020 has meant that the development pipeline and availability of existing buildings across the North West is at an all-time low.
Looking towards the office leasing market, JLL predicted a slow start to 2021 and that the second half of the year is likely to see significant activity given the pent-up demand, citing around 1m sq ft of active requirements over 10,000 sq ft.
JLL also highlighted that, for the best space in Manchester, quoting rentals have now reached £40.00 per sq ft and it is expected this will be achieved within 2021.
Stephen Hogg, head of North West at JLL, said: “The continued trend of occupiers taking slightly less, but higher quality space, is expected to continue.
Stephen Hogg
“At the smaller end of market requirements, occupiers are likely to increasingly want some level of fit-out in the space – demanding a hybrid of serviced offices and a more traditional letting.
“In Manchester, we expect flex space to be popular as occupiers lean on this whilst decisions are made. Health and staff wellbeing will move up the agenda and landlords will look to provide best-in-class amenities to support this and keep their buildings attractive.”
He added: “Sustainability of offices will come more into focus as developers look to bring forward more net zero carbon buildings.”
According to JLL, Manchester continues to be the only city outside London that sees residential investment from overseas buyers which is a trend it expects to continue during 2021 and beyond.
“The build-to-rent sector in Manchester has shown its resilience over the course of the pandemic compared with other property sectors, with large scale landlords maintaining high occupancy levels and rent collection rates throughout 2020.
Mr Hogg added: “One of the drivers of the build-to-rent success in Manchester is the young demographic of the city, with 45% being under the age of 35.
“The large scale funds are now turning their attention to the suburban market and we expect this to become a trend during 2021 with suburban renting in Greater Manchester witnessing substantial growth.
“Going forward we need to get used to the language of a ‘hybrid future’, getting the balance right of homeworking versus time in the office is one we will all try to solve this year.”
He said this will alter the way the office market works, fewer desks, more collaboration space, possibly with requirements marginally smaller.
In turn this will affect the residential market, as we evaluate how our homes are designed and used. Changes in the retail market have already impacted on the industrial sector and the combination of all these changes will also ultimately affect the investment sector, he said.
