In early August, Dukes Bailiffs discussed how London’s commercial property market has been hit hardest in the UK following the outcome of the EU referendum. As the country’s main economic centre, London has commanded much of the Brexit spotlight, but recent research shows Manchester and Edinburgh performed strongly amid the uncertainty. So, exactly how well did these cities do?
Manchester on the rise
Estate agents Savills reported £304 million of office transactions in Manchester during H1 2016. This was approximately 8% higher than the £282 million seen in H1 2015, which was before Brexit concerns came to the forefront.
The real estate firm also revealed overseas investors spent £212 million on commercial property during H1 2016, accounting for 70% of all deals and surpassing the long term average. These figures suggest many overseas investors were not put off ahead of Brexit and that there is a growing interest in the North West.
Peter Mallinder, Investment Director at Savills, confirmed this: “[W]e expect the increased depth of overseas interest in Manchester to help stabilise the market as foreign buyers take advantage of the weaker sterling and reduced competition”.
Edinburgh closing major deals
Farther north, Edinburgh has also succeeded in 2016, emerging as the top London alternative among UK commercial investors, as revealed in a study by law firm Morton Fraser.
Investors appear willing to act on the appeal of Scotland’s capital. Earlier this year, German real estate company Deka Immobilien bought the Atria development for £105m, while property firm Drum secured £4.5 million of office space at Edinburgh Park in 2016.
Commercial property company Knight Frank recently addressed the topic, describing Edinburgh’s office performance as “robust” during Q2 2016. Further, Q3 started with certain high-quality office developments achieving a £33 per sq. ft. rental value in July.
Multimillion pound deals have elevated Manchester and Edinburgh, while some UK commercial property markets are struggling. Across the country, commercial landlords should learn from these success stories, but must also be prepared for anything. Property owners can stay agile by working with recovery specialists to collect commercial rent arrears in tighter schedules.