The Growing Popularity of Commercial Property in Manchester
Manchester’s commercial property sector is growing in popularity with local, national, and international investors. The first quarter of the year saw an increase in investor activity and a drop in available stock levels as rents grew higher.
The initial three months of 2016 saw more than 196,533 square feet of commercial property change hands, according to data recently released by Colliers International. This represents growth in the amount of commercial space being bought and sold, albeit a slower growth rate than that seen in the first quarter of 2015. The growth figures also exclude the One New Bailey development, for which the letting of a further 80,000 square feet is imminently to be completed.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
This represents, according to Colliers, a “healthy” commercial property market for Manchester at the moment, with unprecedented and still-growing levels of demand. This demand is reportedly coming from buyers at the local and national level as well as international. Indeed, with demand continuing to grow and available supply shrinking as the development pipeline fails to keep up, there are fears that the middle of this year will see a “complete absence” of available commercial space – or at least of commercial space that is ready for occupation rather than off-plan or in development shared coworking spaces. It could, forecasts suggest, take until the third quarter of next year for the supply of available, completed commercial space to pick up and end this dearth of opportunities.
The business service sector is the single biggest sector behind commercial space take-up in the first quarter of this year, accounting for about a quarter of the total. This was closely followed by the retail and leisure sector, which took up 21% of commercial space, and then by legal services at 18%.
The growing appeal of Manchester’s commercial property sector is not hard to account for. Investors are growing more and more hungry for regional assets in general as yield compression and high prices continue to mar the attractiveness of London, and many of the UK’s major cities are seeing rapid growth in activity as a result. For example, the first quarter of 2016 saw more commercial property transactions take place in Birmingham than ever before, and other key cities reported similarly strong periods of activity.
Manchester in particular is one of the country’s most important cities and most robust local economies outside of the capital. The city is among the UK’s leading cities for job growth, and this is partly thanks to the presence of major universities and a high retention rate of graduates, which translates into an annual influx of 20,000 new workers qualified at degree level or higher.