The hard fact is that living in the capital comes at a price–and a rather large one at that. It is estimated that average rents in London have hit as much as £1,500 for a typical apartment or house – an all-time high. Research by HomeLet shows that rents have increased five times faster than the income of local tenants in the second quarter of 2015, a staggering increase over such a short period.
With rental prices in the residential sector having increased so dramatically, one can only imagine what the cost of renting commercial space for businesses in the country’s capital is, particularly in its busy city centre. It is therefore no surprise that businesses are abandoning London and it’s over expensive and arguably overvalued property market for the more accommodating cities outside of the M25.
So where are Britain’s industry giants escaping to?
The answer to this question is rather simple: the North West, and in particular, Manchester. Here, the economy is flourishing, thanks to the rising number of companies relocating to the area and local businesses experiencing strong growth and expansion. RBS Regional Enterprise Manager, Heather Waters, states: “The economy in the North West continues to thrive and expand, and much of this is supported by the diverse business environment in the region”.
Reports have shown that office take-up in Manchester city centre almost doubled in terms of its five-year quarterly average between July and September 2015. In fact 373,477 sq ft in the third quarter of 2015 was taken up by office space, the highest amount outside of London (252,461 sq ft being the usual quarterly average). Notable acquisitions included a 60,300 sq ft take up by NNC Group at Allied London’s 160,000 sq ft XYZ Building in Manchester’s highly sought-after district of Spinningfields and Russian giant Gazprom securing 51,200 sq ft worth of office space at 5 First Street.
The number of new landmark developments in Manchester is growing steadily; one of the largest of which is the Great Northern Warehouse, an iconic building in the city centre which is set to become a 780,000 sq ft mixed-use quarter with retail units, restaurants and offices, as well as residential properties. This is £300million project aims at transforming the former warehouse into a ‘city quarter’ that has already drawn comparisons to New York’s trendy Soho district.
The facts are indisputable - Greater Manchester is the place to be for both businesses and workforces.
- Over 2.8 million people live in the local area – a number that is increasing year-on-year.
- The local economy is worth approximately £55 billion a year.
- Manchester’s population speaks over 200 different languages
- The infrastructure in Manchester is ever improving thanks to projects such as the HS2 Speed Rail, Airport City and the continuous Metrolink expansion
How exactly does that affect the future of Manchester and its property market?
The relocation of big-name companies is a boon to the local lettings market, as the city becomes an attractive destination for both post-grad students and professionals
Not only does a growing number of businesses translate into an increased office take-up, but it also generates more demand for rental accommodation in the city. In return, an increase in rental demand will consequently cause house and rental prices to rise as well, as the Manchester housing market continues to be undersupplied. One of Britain’s largest estate agents, Countrywide, reports that over 50% of tenants taking their first step on the property ladder are looking outside of London, to more regional cities like Manchester, where housing is more affordable.
As a buy-to-let market, Manchester is certainly in its prime. With new housing schemes being announced and approved on a seemingly weekly basis (data from Deloitte Real Estate estimates that 10,000 apartments in the private rented sector (PRS) have already received the green light to be built in Manchester) , the city is leading the country’s construction efforts to meet the UK’s ever-growing housing shortage head-on.