On the pitch, Manchester’s two football clubs – United and City – are battling for position in the Premier League. Meanwhile, in the regional property market, after a strong 2010, Manchester is aiming to outdo its rival cities in 2011.
Any match report of the UK property sector in 2010 will highlight Manchester as a key player.
According to the Manchester Office Agents Forum, city centre take-up hit 1.35m sq ft last year. Some agents say that 328,000 sq ft of this – representing The Co-operative Group’s prelet, which became a certainty last year – should be discounted from the total. But even without it, in and out of town take-up levels increased by more than 45% to a 20-year high.
It was a performance that put Manchester at the top of the regional property Premier League (see table). Compiled by comparing King Sturge’s calculations of total take-up in and out of town in each featured city, Manchester easily took the spoils.
CB Richard Ellis’ city centre calculations for 2010 also put Manchester comfortably ahead of regional rivals. Birmingham – still considered England’s second city by most outside Manchester – clocked up only 690,000 sq ft, with Edinburgh and Glasgow at 676,000 sq ft and 527,000 sq ft respectively.
But will Manchester’s local economy and property market fundamentals stand it in good stead looking forward?
“We had a fantastic and very strong year in 2010,” says Chris Mulcahy, partner with King Sturge. “And although we won’t have as high take-up this year, we will definitely stand out from other regional cities.”
Independent economic assessments of Manchester show that it faces the same uncertainty as the UK’s other cities. In a recent report, the influential think-tank Centre for Cities rated England’s most stable cities, taking in factors such as annual average population change, real GVA growth and private sector job growth. Rather unflatteringly, Manchester came 23rd of the 39 cities polled.
Indeed, when CfC ranked cities by employment level, Manchester came in 44th place of 63 cities, with 66.5% of its working age population in employment. Perhaps reflecting their size, Birmingham (62.3%) and Glasgow (65.5%) fared worse.
More encouragingly, CfC ranks Manchester fairly low on its list of cities that will experience sweeping public sector job losses by 2014-15. Assuming that there are 490,000 job losses at UK level, CfC predicts that Manchester will lose 2.1% of that total. Compared with the likes of Newport, at 4.3%, the city is cushioned.
CB Richard Ellis research puts the public sector’s slice of 2010 office take-up at just 4%, but paints a picture of a fairly broad base of demand in Manchester, with consumer services and leisure accounting for 38% and professional firms at 23%. The demise of long-standing legal firm Halliwells last year, however, highlighted how precarious the occupier market remains.
But agents argue that Manchester’s office sector has long-term form. The annual city centre take-up over a 10-year average in Manchester is 930,000 sq ft – above its rivals Edinburgh at 710,000 sq ft, Bristol at 680,000 sq ft and Birmingham of 625,000 sq ft.
Tony Bray, head of Cushman & Wakefield’s Manchester office, says: “This year’s take-up won’t be as low as some are predicting. In Manchester, we have great fundamentals, including good links to London by train and good retention of graduates to work in the city.”
Mulcahy adds: “Good-quality professional services companies came to Manchester last year and maybe those with smaller presences will grow.”
Manchester in the European league
Can Manchester really be considered to be a player on the European stage, as local agents claim?
A recent report by Cushman & Wakefield provides a mixed picture. In a comparison of last year’s take-up levels, Manchester ranked 19th of the 29 European cities surveyed.
It beat the likes of Dublin, Lisbon and Athens, although detractors will point out that those three capital cities are located in the struggling PIGS economies.
In terms of prime rental levels, Manchester fared better, ranking 12th, ahead of Madrid, Brussels, Barcelona and Copenhagen.
But assessing whether Manchester can be considered a “European” player is difficult. It is, of course, in Europe, but does it really compete with continental locations for occupiers?
Agents point to US firm SPX, which recently took space in south Manchester after considering a number of European alternatives. However, with footloose European requirements a rarity, agents have few concrete examples to offer.
What Manchester is not short on is aspirations to thrive on the European stage, as the city’s strong presence at this year’s MIPIM in Cannes showed.
Speaking to EG at the festival, council chief executive Sir Howard Bernstein said: “What we have to do is make absolutely certain that we continue to differentiate ourselves from other cities, not only in the UK but across Europe, and we’re doing our very best to achieve that.”
Tony Bray, head of C&W’s Manchester office, says: “We have an international airport that serves more business locations than anywhere else outside London. We have a council leader with a reputation for doing what he says, which provides stability to the market. This puts us on the same stage as the smaller regional cities in Europe such as Milan, Frankfurt and Brussels.”
But Bray adds: “Perception is our biggest challenge – showing how and why we can compete on an international stage.”
