Public sector to keep property going in downturn, says report
PUBLIC/private partnerships will prop up Manchester developers in the downturn, according to a survey out today on the state of the city’s property sector.
There were just nine new development starts last year – five of which came from the public sector – compared with 19 and 32 in prior consecutive years, according to Drivers Jonas’ Manchester Crane Survey.
At least five building sites have been put on hold or abandoned in 2008/09. Three of the stoppages – at Sarah Tower, Sarah Village and Canopus in Salford were the result of the BSC group going into administration last August.
“The remainder of 2009 will clearly be a challenge but Manchester’s strong commitment to public/private sector partnerships will help to sustain the growth of the city centre,” the report said.
“The city council’s partnering arrangements will continue to play a key part in the city’s development and help to maintain Manchester’s strength in the longer term.”
The report said that 44% of current development sites are in the northern fringe of the city with the next biggest area of development activity being at Piccadilly, with 17%.
But economic uncertainty means any new speculative developments have been put on hold.
John Walley, partner at the firm’s Manchester office, told TheBusinessDesk: “Looking back we have to accept that the last 15 years all enjoyed steady growth but that can’t go on forever. There had to be a correction. The quicker we are all realistic the better.
“We have to use lateral thinking in the way we procure development, which will recover, but not to the heady levels of 2007.”
Property agents, meanwhile, will feel the effects of an oversupply of office space, the report said.
The Manchester office market has around 2 million sq ft of empty space at present – 54% of that is Grade A – its highest level for several years. Around 1.1 million sq ft of office space was taken in 2008.
Mr Walley said: “Property is not a perfect market. Projects do take time to get off the ground. It’s not easy to react to market conditions, the effect of that is that you do get over and under supply.
“Buildings are being finished this next year which will lead to an oversupply in the market.”
This over supply means that landlords will have to become more creative in lease packages offered to tenants, with more generous incentives including increases in rent free periods.
On a more positive note, the report gave a special mention to Media City. “The role that this one project plays in the strengthening of the Manchester economy should not be underestimated,” it said.
