Exchange Quay Deal Highlights Growing Confidence In Office Market

The vast majority of real estate professionals in the North West expect the commercial property market to improve further, according to influential report published today.

The Commercial Property Confidence Monitor, a joint report by Lloyds Bank and the Investment Property Forum, found that 77 per cent of small and mid-sized firms anticipate an increase in market activity during the next three to six months. At the same point in 2012 the figure stood at 16 per cent. 

The report also found that 88 per cent of fund managers expect their assets to increase in value over the coming months, compared to 10 per cent at the same point last year.

Among major businesses, 80 per cent expect the same, with 63 per cent planning to increase their investment commitments over the next three to six months.

Mark Ellis, Head of Property, SME banking, Lloyds Bank Commercial Banking, said: “The recovery has now started to trickle down from the sector's major players with the North West's SMEs now catching the infectious confidence flowing from the top end of the market and London.

“This has been reflected in our own activity as a group in the sector, which in volume terms has been weighted towards the SME market this year. We expect further growth in our loan book in 2014."

Alan Patterson, chairman of the IPF Research Steering Group and global head of research and strategy at AXA Real Estate, commented: "The improved optimism demonstrated by fund managers earlier in the year has continued to strengthen, probably as a result of the dramatic recovery in the UK economy in recent months.

"The emphasis placed on management suggests lingering concerns in the occupational market outlook, but the IPF's latest quarterly survey of UK commercial property forecasts from both advisors and fund managers indicate some rental growth emerging in the current year.

"Strong capital inflows and new fund launches, together with a willingness of investors to accept higher risks, will drive managers to look to good regional stock in order to provide better returns, and certainly higher yields, than might be obtainable from prime and core central London and South East property."

The Commercial Property Confidence Monitor, surveying more than 500 real estate professionals, is one of the most respected barometers of market sentiment within the commercial property sector and questions leading organisations in the region including surveyors and fund managers.

Expert Opinion

The findings of this report are certainly very positive and reflect what we are seeing in the market. <br/> <br/>“Although there remains to be some level of caution in relation to occupancy and speculative developments, we are seeing a noticeable increase in take up in office space across Greater Manchester during the last few months. Indeed, Lambert Smith Hampton’s latest report said that office take up in Manchester city centre was at a three year high and up 77 per cent on the previous quarter. <br/> <br/>“As a consequence of this resurgence of occupational demand based on improved economic indicators, we are seeing substantial new capital inflows both for Grade A office developments and refurbishments in attractive locations, such as the £10m investment in Exchange Quay. I would expect to see further increases in office take up and investments in the first half of 2014 and beyond as confidence continues to take hold.” <br/> <br/> Roy Beckett - Partner