There is no doubt that Manchester is booming as there is an ever-growing demand in the property market. With a thriving business sector boosted by the city’s location at the heart of the Northern Powerhouse Initiative and attracting new residents from across the UK and the world, there is an ever-increasing demand for new residential and office space. But according to Savills’ ‘Spotlight on Manchester: where are the gaps?’ report, in order for Manchester to meet this growing demand in the property market diversification is necessary within the city’s commercial and residential property supply.
Diverse Residential Requirements
Savills’ report has highlighted the need for more mid-market residential properties at a time when development is disproportionately focused at the top end of the market. With developers competing for a smaller pool of buyers more opportunities could be created in the mainstream market.
Manchester has a high graduate retention rate of 51%. This is one of the reasons so many top employers are setting up bases in the city. In an attempt to retain this skilled talent pool, changes to planning policy could help enable developers to build purpose-built student accommodation in certain areas of the city.
At the other end of the scale, the report also shows that over the next 10 years, the number of people aged over 65 will grow twice as fast in Manchester than the rest of the UK. It is set to reach 61,000 by 2027. As this generation moves back into city centres they are both increasing city-centre demand. All while freeing up family homes in the suburbs.
Forecast over the next few years is a continued shortage in housing in Greater Manchester. As of December 2017 there were 7,000 new homes in the pipeline during the next two years. However the actual need is 11,254 per annum with just over a quarter of these required in the city centre.
As Adam Mirley, Development Director at Savills Manchester says, “Housing delivery has grown in the city recently. However it’s still not enough. With a shortfall of more than 1,000 homes in 2016-17. Much of the residential pipeline comprises city centre flats, but future supply needs to be more varied in line with the city’s wide ranging population.”
Also there’s increased demand for a less expensive office space. Only 59% off Manchester and Salford’s office space is priced as less than £25 per square foot. Despite over 71% of demand being for that price point.
James Evans, Head of Savills Manchester, explains that “demand for Grade A office stock is so high that it’s spilling into secondary stock and pushing up rents there”. He predicts that in the short term this will drive demand for serviced and lightly refurbished offices. In the longer term he expects the core office market to expand into other area. Such as Oxford Road, Irwell Corridor and the Ancoats area.
It is also likely that in order to be closer to customers, many distributors will move into a range of small-scale distribution locations. Such as office basements and off-pitch retail units.