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25 Mar 2019
Office investment remains high in Manchester and Birmingham
Manchester and Birmingham are two of the UK’s most active business and commercial sectors. During 2020, both cities saw the strongest office investment volume levels outside of the capital.
Avison Young’s Big Nine report revealed how the nine regional city’s office space markets fared throughout 2020. Investment volumes across the nine core cities amounted to £580m during
Q4 2020 alone. This is up 2% on the ten-year average and was the busiest quarter of the year.
During the past year, Manchester led office investment activity at £325m, while Birmingham followed with £278m. Leeds, Bristol and Edinburgh tied for third with £200m transactions each.
These cities saw a particularly strong end to the year. In the last quarter, four deals valued between £85m and £120m completed. This includes two in Manchester, one in Birmingham and one in Leeds, showing the north and Midlands are seeing particular resilience in office investment.
Manchester leads the way
A number of large deals came forward in the Manchester office market in Q4 2020. This is a significant improvement from the prior two quarters. In 2020, there was a total of 1.3m sq ft of investment in office space with 800,000 sq ft in the city centre. With pent up demand, strong levels of investment are likely to continue throughout 2021.
As the best city in Europe for business in 2020/2021, a growing number of businesses have relocated to Manchester. Office rental space is cheaper, and the city is also home to a strong talent pool with a high concentration of young professionals.
The COVID-19 pandemic has caused many job losses. And many are still in jeopardy, especially as the furlough scheme will end on the 30th of April. Despite that, over 7,000 jobs were announced in Manchester during the past seven months, according to UrbInfo. This is positive news for the city moving forward. Additionally, it further shows that businesses are still interested in investing and growing in this city.
Birmingham set for more growth
In 2020, total office activity amounted to 520,000 sq ft of space in Birmingham’s city centre and 172,000 sq ft in out-of-town areas. These numbers are below average, but growth is expected in the next year.
Demand is on the rise for higher quality office space. In Birmingham’s city centre, there is currently 434,000 sq ft of grade A space available. Two other speculative developments are also currently under construction.
Birmingham has recently been named the regional startup capital for the seventh year running. Despite the challenges many businesses and workers faced in 2020, startup growth remained resilient in the city. Birmingham is also a top location for businesses that are scaling up. As more businesses are moving and opening in the city, this will continue to elevate Birmingham as a top business location.
Strong business prospects impacting housing market
Manchester and Birmingham are two of the most important business regions in the UK. Both cities are often dubbed the UK’s second city. As business prospects continue to excel even during challenging times, housing and investment in both cities are following suit.
With a growing number of businesses choosing these cities for office space or even head office relocations, the population of both cities continue to rise. Young professionals are flocking to the north-west of England and the West Midlands for the wide range of employment prospects.
Manchester and Birmingham’s rising positions as top UK business locations coincides with both cities vastly growing housing markets. This is providing strong property investment opportunities in both cities with high rental demand and house price growth forecast for the coming years.