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Manchester is set to capitalise on thriving IT and media sectors, global transport links and renowned universities to profit from the changing role of cities as drivers of growth.
In an increasingly digital, interconnected world, with rising numbers of automated professional jobs, the sustainability of cities will be a key driver of investment decisions in real estate. The Manchester office market looks better placed to prosper from the influence of the knowledge-based economy than most.
Technological change is reshaping commercial property demand, with Deloitte forecasting that 35 per cent of UK jobs are at high risk from automation over the next two decades.1 A high proportion of these jobs will be office-based: routine, lower skilled roles are set to be particularly affected, while markets that compete primarily on cost look particularly vulnerable to structural change.
More knowledge-intensive, higher value-added occupations are less likely to be affected by automation and the increasing influence digital technology is having on the economy.
The transformation that has made Manchester a thriving, vibrant hub will help the city develop the type of interconnected, knowledge networks that are becoming more important in attracting and retaining highly-skilled talent. Greater Manchester has a population of 2.7 million and the deepest pool of highly-skilled labour in centres outside of London. The area has access to more commuters than any regional conurbation in the country: seven million people live within an hour’s drive of the city centre.2
Manchester has the third largest airport in the UK3, with over 60 airlines serving 210 destinations for around 19 million passengers each year.4 The airport is undergoing a £1 billion investment that could potentially more than double its passenger capacity to 50 million a year by 2025. These ambitious plans are aided by growing links with China. For instance, Hainan Airlines plans to add a fifth weekly flight to China in June, a year after launching the service.5
Similarly, the extension of the Metrolink tram service and ongoing electrification programme of rail services in the North West of England are improving connectivity in the city. The promise of the so-called Northern Hub rail project is set to improve connections with Leeds, Liverpool and other northern cities. Furthermore, the HS2 high-speed rail project aims to cut travel times between Manchester and London to one hour from 127 minutes by 2033.6
Internationally renowned education establishments are another draw for high-skilled workers and their families. The city has over 100,000 students across four universities, producing 28,000 graduates a year. Furthermore, the University of Manchester is one the five best institutions in the country in terms of its graduates’ appeal to businesses, with 94 per cent of them entering employment or further study on concluding their course.7
The growing stature of the city is reflected in Manchester Business School’s MBA programme being ranked in the top five outside of the US.8 Similarly, two Premiership football teams and one of the world’s busiest music venues are two cultural reasons why the city is the third most popular with tourists to the UK.9
Manchester’s growth has been driven by an expanding services sector; financial and professional services in particular. Finance, information and communications technology, business services and administration account for 33.9 per cent of jobs in the city, with Royal Bank of Scotland and the Co-operative Bank among the ten largest office occupiers.10
Manchester’s rebirth has also been built around thriving digital and knowledge industries. The digital sector grew by 92 per cent between 2010 and 2014 and produces £2.9 billion of revenues, the fourth highest digital turnover in the UK. With over 62,000 jobs in the sector, Manchester arguably has the largest agglomeration of openings in digital skills outside of London11. The presence of Cisco, Oracle and IBM in the area also highlights that the city is well-positioned in the development of cloud computing.12
The media sector is another area where Manchester is stealing a march on much of the country as over 200 businesses, including the BBC and ITV, cluster around the Media City development in Salford Quays.
Local policymakers in Greater Manchester have been more successful in developing the region’s economy than many in other urban centres. This encouraging trend seems set to continue, with Greater Manchester preparing to enact a devolution deal that bodes well for further investment.
These attributes and the fundamentals of the local office market explain why Manchester looks better placed than other cities outside London to prosper from the growth in knowledge-based businesses. By providing an environment where people can live, work play and learn, the city offers scope for robust long-term rental growth.
1 Source: ‘Agiletown: The relentless march of technology and London’s response’, Deloitte, November 2014
2 Source: ‘New Economy – Greater Manchester Key Facts’, New Economy, January 2016
3 Source: Manchester Airport, April 2017
4 Source: Civil Aviation Authority, April 13, 2017
5 Source: ‘Direct flights to Beijing stepping up to five times a week’, Invest in Manchester, March 22, 2017
6 Source: Hs2, Manchester, April 2017
7 Source: ‘Employability’, University of Manchester via HESA, 2016
8 Source: ‘Manchester Key Skills’, InvestinManchester, April 13, 2017
9 Source: “Inbound town data”, Visit Britain, 2015
10 Source: ‘Manchester: Big Six Report’, Property Market Analysis, April 10, 2017
11 Source: ‘Tech Nation 2017 – Manchester’, Tech City UK, 2017 http://technation.techcityuk.com/cluster/manchester/
12 Source: “Manchester – Digital Connectivity”, MIDAsS, 2017 http://www.investinmanchester.com/why-manchester/connectivity/
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