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David Lathwood, lead director at JLL, analyses the North West property picture
Some serious momentum was built
in the region’s property market in 2014 – our team handled twice as many
investment transactions as in the previous year, for example – and looking at
the first half of 2015, things have continued apace.
The pre-election uncertainty felt in many sectors didn’t dampen the
appetite of investors seeking out assets and, with plenty of money still
looking for a home, the region - Manchester in particular - appears to be
standing strong as the preferred market outside of London.
This appetite from major institutional investors for larger assets in the
North West was demonstrated by L&G’s acquisition of a 50% stake in
It’s also another indication of the ‘northshoring’ phenomenon - with
funds shifting away from the hotter markets in the capital and South East in
the search for stronger yields. It’s also a sign of the growing maturity of
what has been a landmark scheme for Manchester, and one that is primed for
We’ve also had a sizeable foreign investment deal in the form of PATRIZIA
Immobilien AG’s purchase of First Street.
Interestingly, a key element of that deal was the fact future phases at
First Street are likely to include a new private rented sector (PRS)
development of circa 500 apartments.
This would be PATRIZIA’s first such investment in the UK – a clear signal
of the strength of PRS as an asset class in Manchester as the city’s
residential continues to go from strength to strength with both capital values
and rents increasing.
But money being money, it has to go somewhere and for that reason I’d
chasten against getting too satisfied with the region’s performance just yet.
The true barometer for the strength of the market is in the readiness of
occupiers – preferably from outside the region - to lay roots here.
On that front 2015 has so far seen more teases than pay-offs. Magic
circle law firm Freshfeilds’ confirmation that it’s seeking around 100,000 sq
ft in the city is welcome news but other mega-deals have proved elusive.
Of course at smaller end of the market the region is still seeing the
kind of churn that made Manchester the best performing of the Big Six cities
outside of London last year. That’s because the prevailing trend in real estate
continues to be urbanisation and the fundamentals here – infrastructure, talent
pool, quality of life and cost of living – are all compelling.
To capitalise on this we need an additional injection of stock in the
city centre and a headline deal wouldn’t hurt in pumping some additional energy
into the market.
Lead Director - North West
Head of UK Regional Marketing & Communications
+44 (0)161 828 6407