Post-Covid recovery in the region’s two biggest cities will be driven by Manchester’s economic expansion over the past five years and buoyant build-to-rent sector, and Liverpool’s busy port and associated industries, as well as momentum in life sciences, Avison Young said.
The real estate consultancy’s 2021 Forecast reports for Liverpool and Manchester noted that Manchester has been hit hard by the effects of the pandemic but that previous economic expansion, especially in the services sector, and a growing number of businesses setting up in the city will help to cushion the blow this year.
High levels of activity in the residential capital markets will also contribute significantly to Manchester’s post-Covid economic recovery. The city has become a hotspot for the booming BTR sector, Avison Young noted, and demand among investors is likely to continue in 2021, driven by rapid population growth, business investment and strong retention of university talent.
Another driver for recovery is the city-region’s industrial investment market, which has gone from “strength to strength”, the report said. Greater clarity on Brexit is likely to further increase levels of activity in this sector.
Meanwhile, the office market has been relatively slow in 2020 – particularly when it comes to large transactions – but mid-size office requirements “will rebound in time, as businesses take a view on their occupational needs and the benefits of good quality office space”. Manchester is also likely to see its fair share of central government relocations from London as part of the ‘levelling up’ agenda.
Chris Cheap, principal and managing director of Avison Young’s Manchester office, said: “2020 taught us that making predictions is something of a mug’s game, however as the vaccine roll-out provides more confidence, and the new reality emerges, there are some very clear dynamics that Manchester has the resilience and flexibility to react to brilliantly.
“Addressing the various issues created by the pandemic for our communities across Greater Manchester is clearly still going to take a significant amount time, with the need for the public and private sector working together to deliver the right solutions.”
Avison Young’s Liverpool forecast report noted that Liverpool was achieving strong growth relative to the North West region and the rest of the UK prior to the onset of Covid-19.
In particular, the expanding Knowledge Quarter – already home to several world-leaders in infectious disease, digital health and advanced manufacturing – will be “critical to attracting more like-minded businesses and investment into the city in 2021”, the report said.
Liverpool’s active and important port will be another key driver of the city’s economic recovery. In particular, possible increased trade between the UK and US following Brexit, as well as the city’s bid for ‘free port’ status, add to the positive outlook.
If the bid is successful, free port status would provide the Liverpool City Region with advantageous tax conditions, catalysing development in areas surrounding the port.
Meanwhile, the Government has also committed to moving 22,000 civil service jobs out of London and Liverpool’s strengths in life sciences could attract the likes of NHS England, according to Avison Young. Other opportunities for increased inward investment could come in the form of increased reshoring of call centres and Liverpool’s strong cultural, retail and leisure offering.
Stephen Cowperthwaite, principal and managing director at Avison Young in Liverpool, said: “After this latest period of lockdown, although recovery will take time, the resilience demonstrated by the local economy means there is a firm foothold to launch Liverpool’s recovery in 2021.
“Some trends, such as an increase in flexible working and deglobalisation – shifts that were already taking place but have been accelerated during the pandemic – are here to stay.
“But as a city, we know where our strengths lie and that allows us to home in on those sectors and show the world that Liverpool is primed to bounce back.”