Manchester Crane Survey 2016 Construction Activity Boost
Total Page:16
File Type:pdf, Size:1020Kb
Manchester Crane Survey 2016 Construction activity boost January 2016 Contents The report 1 Key findings 2 Manchester snapshot 5 Crane Survey results 7 Residential 8 Office 10 Hotel, Leisure and Retail 13 Education and Research Facilities 16 Conclusions 17 Development table 18 Contacts 23 The report What? A report that measures the volume of development taking place across central Manchester and its impact. Property types include residential, office, leisure, hotels, education and research facilities. Where? Central Manchester including parts of the Northern Fringe and Southern Arc. Who? Developers building new schemes or undertaking significant refurbishments of the following: Size minimum = office 10,000 sq. ft, retail 10,000 sq ft, residential 25 units, education, leisure and hotel schemes – significant scheme for inclusion. When? Our research for this Crane Survey was undertaken between 1 November 2015 to 8 January 2016. How? Our in-house real estate team in Manchester have monitored office construction across the city. Our field research is then verified with direct industry links and in-house property experts. Manchester Crane Survey 2016 1 Key findings 2 Key findings In the midst of a politically-contested nationwide housing shortage debate, a year on from Manchester’s Devolution Agreement in November 2014 and a growing emphasis from central government on the strength of the Northern Powerhouse, we take a look at how Manchester is continuing to shape possibilities for local government by leading by example. We’ve analysed the data to provide an in-depth analysis into the perceived signs of economic recovery in the City Region to see whether the level of growth has been sustained and if the Northern Powerhouse, coupled with the government’s acknowledgement of the demand for new housing, is driving delivery on the ground. The volume of In November 2014, ten leaders from the Greater • There was an absence of any new Grade A office residential units Manchester area signed a devolution package with space completed in 2015, the first time in over currently under central government that will lead to the control of a 14 years. This seemingly biennial reduction in £6bn health budget from April 2016 and will eventually supply of new space has put upward pressure on construction is give the region an elected mayor in exchange for rents. However, the volume of Grade A office space the highest since control over skills, transport, housing, and economic currently under construction is 1.04 million sq. ft. 2008 and exceeds development. While these devolved spending powers within the study area, which is the highest since the pre-recession are yet to be implemented, the ability for Greater 2008. average levels of Manchester to be the first region to strike a deal with government clearly highlights its strength as a unified • There is currently no student housing development delivery. authority and this strength is reflected in this year’s key onsite for the first time in five years, and this statistics. current absence would appear to be primarily driven by planning policy. However, the University From the data in this year’s survey, a number of key of Manchester have a large scheme in the pipeline messages can be highlighted: in Fallowfield, set to deliver 3,000 beds upon completion, and Select Property Group has just • Residential development is dominating development secured major planning consent at the former activity, with delivery almost doubling from last BBC site on Oxford Road. year. The volume of residential units currently under construction is the highest since 2008, which is the • Hotel development since our last Survey will see the biggest talking point of this year as it exceeds the most rooms completed since 2007. Two new major pre-recession average. Indeed, above average levels leisure destinations have also been completed since of delivery continue to be scheduled for 2016; a year the last Survey and we take an in-depth look at the that is set to produce the highest delivery rate on success Manchester has had toward increasingly record since 2007. becoming an international travel destination. Manchester Crane Survey 2016 3 Overall, the steady performance of both 2013 and The healthy pipeline for the study area indicates that 2014 has continued into 2015, but the dynamics of the local economy will continue to go from strength the individual residential, office and leisure markets to strength if these trends continue. These signs of are changing. The 2016 Crane Survey shows that the sustainable growth will ultimately make it easier to number of new starts is up by 40% on 2014 and a secure better devolution growth packages from central number of major schemes that were highlighted as government in the future. key projects in our last Crane Survey have now been delivered (20 in total). Manchester: residential residential development pipelinedevelopment pipeline Manchester: office development office development pipeline pipeline No. of units Square feet 4,500 1,600,000 4,000 1,400,000 3,500 1,200,000 3,000 1,000,000 2,500 800,000 2,000 600,000 1,500 400,000 1,000 500 200,000 0 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Completed u/c 2002-2015 Average Completed Under construction Let under construction Manchester: Hotel development Hotel development pipeline pipeline Manchester:Number of new starts Number per crane surve of ynew starts per crane survey No. of rooms New starts 700 30 Secondhand 600 25 Grade A 500 20 400 15 300 10 200 100 5 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2007 2008 2009 2010 2011 2012 2013 2014 2015 Completed Under construction 4 Manchester snapshot Manchester Crane Survey 2016 5 Development snapshot Manchester Which sectors are active? Number of schemes under construction 7 office 3 hotels Office space under construction 1.04 m sq. ft 13 1 residential education and research Number of new starts % of space let in offices due to complete 2016 2010 2007 Average in 2016 28 Residential units under 21 78.4% 14.5 let construction 2,982 5 0% 100% New completions this year: 19 6 Crane Survey results Manchester Crane Survey 2016 7 Residential Putting the ‘house’ in ‘Powerhouse’ Total amount under construction In our last Crane Survey, there were 1,426 units under Highest delivery construction within the study area, which meant levels 4,196 units (2006) exceeded the 2002-2014 average and highlighted strong signs of recovery for the residential development market. This year, the question was whether this level of Anticipated growth could be sustained, or if development was being delivery 2,175 units (2016) artificially bolstered by HCA and Built-to-Rent funding Pre-recession average unlocking schemes such as Nuovo, Smithfield Square, The 1,777 units Point and Greengate. The anticipated Lowest delivery activity of units for In short, there’s nothing artificial about Manchester’s 0 units (2013) 2016 is at 2,175, ability to induce residential development – it is clearly which is almost being seen as a place to invest from both a domestic and foreign perspective. The number of residential units The notable schemes that have started include: 400 units higher under construction is currently almost double last year’s than the pre- at 2,982 units up from 1,426. • One Cambridge Street • Timekeepers Square recession average. (282 apartments) (36 units) The number of new schemes being delivered has • Angel Gate (343 apartments) • New Bailey, Stanley Street This level of increased from 3 last year to 12 this year, which is the • Wilburn Street basin (90 units) residential delivery highest number of new starts since 2008. The anticipated (491 apartments) • The Hat Box (144 units) delivery of units for 2016 is 2,175, which is 400 units is unparalleled • 1 Water Street • hoUSe (44 units) higher than the pre-recession average. This level of in any other (307 apartments) • X1 Eastbank (111 units) residential delivery is unparalleled in any other regional city. regional city. • City Suites (265 apartments) • New Union Street (302 units). • The Roof Gardens, Ellesmere Street (71 units) From left to right: Cambridge Street, City Suites, Angel Gate, Water Street, Wilburn Street Basin 8 In terms of delivery, we expect the number of Importantly, funding from The Greater Manchester new units to be delivered by Q3 2017 to equal Housing Fund, which will offer £300m over the next approximately 2,982, with 2,175 of these units to be ten years, has helped to assist in the completion of completed by the end of Q4 2016. To put this statistic 744 units within the study areas since its inception. in context, the average completions between 2002 and 2015 average was 1,238 units p/a, which is highlighted Manchester: residential development pipeline in the graph at the bottom right. This level of delivery is No. of units in line with Manchester City Council’s recent minimum 2,500 units a year as set out in their draft Residential 4,500 Growth Prospectus, although it is well short of the 4,000 55,000 units to be delivered by 2027 set out in the Core Strategy. 3,500 3,000 With regard to pipeline and geographical distribution, 2,500 there is a clear growth agenda for the Northern Fringe areas of the City Centre; planning approvals have now 2,000 been granted for the delivery of an additional 313 units 1,500 in Ancoats and New Islington (Manchester Life) with 1,000 a further 592 units approved for other institutional investors, further to the 601 units already under 500 construction across the northern boundary of the 0 City Centre.