In terms of “powerhouses”, Manchester’s property market is already telling a compelling story when it comes to investment. Both UK and overseas investors are continuing to turn their attention away from saturated markets in the South East towards the city in search of better yields.
As a result, the region hasn’t been short of significant deals over the past six months – notably L&G’s acquisition of a 50% stake in MediaCityUK and PATRIZIA Immobilien’s purchase of First Street, which demonstrated the clear strength of PRS as an emerging asset class in Manchester.
The potential to capitalise on this is where the northern powerhouse concept holds the most potential in my eyes. It is logical to assume that delivering greater connectivity – both physical and conceptual – between northern cities will not only spread the benefits further afield but will also create more of a pull factor, providing global investors with more choice when it comes to directing capital to the UK.
Research from JLL shows that, when taken as a whole, commercial real estate investment transactions across Liverpool, Manchester and West Yorkshire totalled £2.2bn in 2014. While that’s a fraction of the £28bn experienced in London, it represented a 66% year-on-year increase, in sharp contrast to the capital, which experienced no growth.
Of course, the true barometer of the strength of a property market is in occupier activity. Greater Manchester is already started to benefit from the “northshoring” phenomenon, with companies opting to base large numbers of staff in the region over the capital owing to cost efficiencies and the region’s skills base. In addition, we’re also seeing a number of native businesses in the region seek larger spaces in the city centre with demand for office space increasing.
This too must be expanded upon. Manchester was recently named the UK’s most livable city, according to The Economist. This, combined with the fact that the North West retains more graduates than any other English region outside of London, shows that we have strong foundations on which talent can be attracted, boosting the chances of attracting higher-value occupiers.
This potential is why improved, faster transport connections between Liverpool, Manchester and Leeds is such a crucial issue. When you consider that the distance from Manchester to Leeds is the same as London’s Central line, then the potential for speedier connections to unlock growth is significant.
The appointment of Merseytravel’s chief executive and director general David Brown as the new chief executive for Transport for the North, and plans for it to become into a statutory body by 2017, are very encouraging signs. There is no doubt that infrastructure in the region is the area that requires the most work. This will be the focal point for the northern powerhouse debate in the coming year until an updated strategy for transport is published.
The North is establishing a new foothold. If the cogs can be linked together, it will provide even more opportunity for both global and national investors to feed the region’s success story.
David Lathwood is lead director for the North West at JLL
