2019 Outlook: North West industry experts share their insight
Key industry experts share their insight on what the year ahead could hold for the North West.
Curated by Natasha Young
David Porter | partner and Manchester office head, Knight Frank
Manchester has seen a record year with 1.5m sq ft of lettings expected to be completed by year end underpinned by three large deals and I expect growth next year to be steady.
Year on year a quarter of all take-up is for new Grade A office space but with only two new buildings coming to market in 2019, secondary stock refurbished to Grade A standard will pick up the slack and price differentials will narrow.
While the cities will continue to drive steady growth, satellite towns, such as Blackburn, that can provide high quality business space in the centre, close to amenities and good transport links, offer an increasingly attractive option for firms looking for multiple bases.
Our latest research ‘(Y)our Space’ confirms that the phenomenon of flexible co-working and staff amenity is here to stay and developers have to respond providing buildings that attract talent which in turn attract occupiers.
Anthony Dillon | managing director for the North, Willmott Dixon
Whatever the impact of Brexit next year, it’s critical that we continue to encourage and drive closer collaboration between the public and private sectors.
While the public sector construction pipeline remains strong right across the North, customers are clearly under pressure to make capital investment go further, especially against ambitious government targets on housing and regeneration.
To deliver the lasting, efficient and quality developments that communities and expanding businesses need, we expect to see growing levels of private sector investment and more and more joint public and private sector funded mixed-use developments as a result.
Uncertainties clearly remain over the future and quality of the construction labour market as well as the costs and availability of materials from the EU, post Brexit. However, our need for new housing, infrastructure and commercial space still continues to grow.
To maintain and accelerate that, 2019 requires closer and more effective collaboration than ever before.
Euan West | Liverpool office senior partner, KPMG
Every business in Liverpool, and indeed the rest of the North West, would benefit from improved infrastructure, which is why it’s been such an important element of the Northern Powerhouse agenda.
Looking ahead to 2019, we need to focus on links between the region’s towns and cities as a priority to bolster the North’s resilience and economic potential.
In Liverpool, ongoing investment in areas such as the waterfront will undoubtedly increase the access businesses have to overseas partners. Peel Ports’ recent investment in a deep-water container terminal is a great example, allowing the biggest commercial vehicles in the world to dock in the North West.
But these prestige projects cannot revitalise the North West’s international trading credentials in isolation. The development of ports can ease congestion, lower carbon emissions and generally make trade easier for firms across the North of England, but only if the region’s road and rail links – for example a link to HS2 – are given equal attention.
“Whatever the impact of Brexit, it’s critical that we drive closer collaboration between public and private sectors.”
John Leake | business development manager, Sci-Tech Daresbury
I expect to see strong growth in technology companies in the North West. Undoubtedly those businesses looking beyond European markets are seeing the greatest opportunities in stronger growth markets like North America and Asia.
We are seeing initial activity in the investment market in ‘patient capital’ providing a more seamless, longer-term investment in technology companies. This, along with a greater focus on ‘scale-ups’ from government, both nationally and regionally, will hopefully increase the UK’s ability to derive increased long-term value out of our innovation base and grow more £1 billion businesses.
Our biggest challenge to take full advantage of these opportunities will be our ability to provide a sustainable long-term skills base. This requires a joined-up approach across schools, colleges, universities, businesses and government to target more effectively critical skills gaps in areas such as engineering and software development, and plan for the increasing shortages in areas such as data science and AI (Artificial Intelligence).
George Lowe | surveyor in Manchester-based retail agency team, Cushman & Wakefield
Initially we would expect 2019 to continue where 2018 left off, with several high profile retailers announcing plans to consolidate their portfolios into a smaller number of better performing stores. These types of announcements could, in part, be alleviated by strong trade in the run-up to Christmas.
As the year progresses we would hope for the rates reductions, announced in the latest Budget, to encourage smaller retailers to continue trading from our high streets. We would be skeptical that these changes are enough and expect pressure for further government intervention in the near future.
We expect to see the continuing evolution of the type of experience being offered by retailers on our high street, with occupiers looking to provide shoppers with more immersive and memorable experiences.
We anticipate that we will continue to see our high streets become home to a greater range of occupiers, including gyms, medical and educational uses and residential developments.
Tony O’Keefe | director, LM6
Industrial property remains the doyen of the UK property investment sector, posting one of the strongest take-up figures on record for Q3 of 2018 at £2.2bn.
This has been driven by a narrative of continued occupier demand within a context of limited supply and rising rents. We would expect this trend to continue for the year ahead.
One notable influence is e-commerce, creating a structural shift in our shopping habits which, although to the detriment of high street retail, is fuelling demand for large scale logistics units as seen in the North West at hubs in Warrington, Bolton and Haydock.
Brexit continues to cast a long shadow across all sectors and the consequences for UK Plc will be profound. Whether these will be positive or negative will unfold over the months and years ahead.
Major manufacturers have raised concerns and it’s hard to see manufacturing growth until the risk of a no-deal Brexit has been extinguished. Once we have a clear direction from government the sector will provide its own solutions to just-in-time delivery and friction at borders, but in the short term suppliers will be forced to review their storage capabilities which will fuel further demand for warehousing.
The industrial sector seems well placed to ride the Brexit rollercoaster and capitalise on the opportunity. On a more optimistic note, as the UK looks to re-establish old alliances with our cousins in the US, will the Port of Liverpool benefit from increased transatlantic trade? Let’s hope so.
“The businesses that are the quickest to react and adapt to changing conditions will ultimately be the most successful in 2019.”
Steve Parry | managing director, ION Development
This year has proved, if nothing else, we are facing an extended period of uncertainty that will continue into 2019.
With Brexit and both national and local political stability proving elusive, the businesses that are the quickest to react and adapt to changing conditions will ultimately be the most successful in 2019.
Other less obvious factors will start to impact on the property market in the new year, including the changes to IFRS 16 (International Financial Reporting Standard) which will bring operational leases onto the balance sheet of many larger companies.
This continual change will accelerate the need to consider new business models, new technologies and adapt to changing tenant and investor expectations. Realigning business priorities to these new demands will be the difference between success and failure, and fortune will favour the most agile.
Opportunities and investment will be ever present but in different forms.
Town centres are changing rapidly as we all know, with declining retail demand and greater expectations from visitors regarding quality and offer. However it is easy to forget that historically our town centres were not purely about shopping.
Developers, investors and our public sector partners will need to be forward thinking and creative to deliver solutions for repurposing town centres by effectively using existing property assets to restore vibrancy.
Alistair Greenhalgh | director, Christie & Co
The hotels market in the North West has continued to grow throughout 2018 as new opportunities come to the market, both confidentially and on an open market basis.
Undiminished buyer appetite from overseas investors, single asset owner-operators and large corporate buyers for quality well-invested hotels has continued to drive market competition and sales prices.
Key regional cities have also benefitted from the rise in tourism and the popularity of the ‘staycation,’ and the competitive pound has certainly boosted the UK’s hospitality and leisure sectors.
Although trading challenges due to cost pressures including staff wages, business rates, pensions, utilities and the cost of food will continue to challenge the hospitality industry in the new year, innovative hoteliers and operators that seek attractive opportunities will thrive.