Manchester showed healthier development activity in offices, education and hotels in the past 12 months compared to a year earlier, according to the latest Drivers Jonas Deloitte Crane Survey.
The annual crane survey assessed construction activity in the year to July 2012 across five UK cities: Manchester, Birmingham, Leeds, Edinburgh and Glasgow.
Link below to full 24-page report
Michele Steel, director of Drivers Jonas Deloitte, said: "The public sector has continued to play a significant role in the ongoing regeneration of Manchester city centre – the two universities combined were delivering one third of the total non-residential floorspace under construction at the time of our survey.
"With the council's ongoing work at the Town Hall and Central Library, more than half of the activity has been public sector led. This is nothing new in Manchester and is demonstrative of the proactive development approach of the city's key institutions."
The research showed a large increase in investment in education facilities, with a total of eight schemes across the five cities surveyed.
On the office sector, Adam Robson, assistant director of Drivers Jonas Deloitte, said: "Three new office schemes have started on site in Manchester over the last 12 months; One St Peters Square [by Argent and Greater Manchester Property Venture Fund], Fabrica on Pollard Street [Royal London Asset Management] and the Bengal Mill development in Ancoats [NQ Developments]. The latter two form part of mixed-use schemes and are comparatively small scale. However, there is a squeeze on Grade A availability and some large requirements out in the market. The potential is still there for a number of major schemes to press ahead if sufficient pre-lets can be secured to drive viability."
The retail sector continues to feel the force of the downturn and the researchers found little retail development across the UK. Royal London Asset Management's Fabrica is the only scheme providing new retail space in Manchester, with 12,980 sq ft due to complete at the end of the year.
Simon Bedford, head of Drivers Jonas Deloitte Manchester, said: "There are one or two major omissions from Manchester's retail offer. The city needs to start looking at where the next opportunity for bringing major new retail floorspace forward is, or risk falling behind to other key cities – Liverpool already has Liverpool One, Trinity Leeds will be completed in the first half of 2013 and Birmingham is seeing a huge rise in activity with a 250,000 sq ft John Lewis under construction and reconfiguration of the Pallisades Shopping Centre underway."
City centre residential construction activity was also down since the last survey. Regional demand remains predicated on domestic economic factors, which leaves little room for optimism. However, Michele Steel said: "With an increasing population, a stated intention to deliver over 16,000 new units in the city centre over the next 15 years, and very little supply being delivered for over two years now, pressure is mounting to get Manchester building residential again. Funding for four city centre schemes has been secured through the Government's Get Britain Building initiative, with two more on the HCA's shortlist for round two funding. We do therefore expect to see some movement in the residential sector, supported by the public sector, as 2012 moves into 2013, 14 and 15."
The number of hotel rooms under construction increased in Manchester, since the last survey. Steel added: "We expect to see a move away from the dominance of the budget hotel provision in the next 12 months, with four major deals being done in the city centre in recent months that will see some of the big missing brands come to Manchester, including Melia and Intercontinental Group, a real boost for the hotel market."
The education sector is expected to continue to see high levels of activity into 2013. MMU and University of Manchester's 2012 schemes will complete, delivering 396,000 sq ft of new educational space, and MMU begins its £139m Birley Fields Campus project in Hulme.
Bedford concluded: "Manchester is now well placed to move forward in new emerging economic sectors. Already number 17 in the European Innovation Cities Index – ahead of Birmingham and every UK city except London – Manchester's plans for new technology, digital media and biosciences development projects will ensure that the projected economic and population growth will stay on track. And whilst all core sectors currently remain subdued, activity is beginning to pick up in Manchester on long-planned schemes such as First Street and Greengate, with a move towards a start on site in early 2013."