Mills & Reeve | Moving on from uncertainty
Mike Edge, head of real estate at Mills & Reeves’ Manchester office, shares what needs to happen in 2020 to move the industry on, what’s going to be hot, and the challenges the leading law firm will be tackling.
Delivering on homes
Whatever your political persuasion, assuming Brexit ‘gets done’ by the end of January, increased activity in the property market is predicted to be one of the results as the property market begins to feel more confident from the occupiers at one end of the spectrum to the investors at the other.
That isn’t the end of the matter because the next thing which needs to happen is that a trade deal has to be concluded with the EU during the transition period which ends in December 2020. This is essential in order to sustain this anticipated period of increased activity. Failure to reach agreement means we will be leaving without a deal returning the property market to a state of uncertainty.
We also need to see the Government starting to deliver on its commitment to build one million new homes in the next five years and also on its promise that there will be an ‘infrastructure revolution’ to service the expansion of development. In order to have any chance of meeting the targets this needs to start immediately, this is the time to accelerate HS2 and Northern Powerhouse Rail.
Central government funding will have to be available so that national and regional transport can be upgraded and we will need to see more of the investment strategies which have emerged from local authorities recently, such as Trafford and the Greater Manchester Combined Authority, who have used low cost borrowing from central government plus their own funds to provide debt funding to support regeneration.
This increased activity and the promise to build more homes and infrastructure will offer scope for further disruption in the construction industry. Property technology companies will continue efforts to work with stakeholders who wish to embrace technology to design, plan and project manage projects, seeing the benefits which better efficiency from the use of artificial intelligence can bring in terms of savings in time and cost.
The use of asset performance data will also be hot. More and more property owners are collating information about their buildings, measuring real time usage of space, common areas, air quality and temperature, for example. The benefits for both landlord and tenant of collecting and processing this data to achieve optimisation and improve occupier experience are becoming increasingly appreciated. Ways of collecting, interpreting and presenting it through artificial intelligence are being improved as property companies increase their engagement.
Associated with these technology-driven buildings is the Property-as-a-Service model, which will continue to grow in popularity, where occupiers communicate with property owners about the services they want via property management platforms. The landlord provides and the tenant pays for a more bespoke service putting the customer experience at the heart of the relationship.
Not surprisingly given the opportunities available, we are seeing high levels of demand for space from science and technology businesses, particularly in Manchester which is one of Europe’s top digital cities and a favoured location for technology companies. This is one of the factors driving the current high levels of office development in the City outside the traditional core into areas like Circle Square, a trend which is set to increase with further development at Noma and new offices at Mayfield.
Market uncertainty is the biggest threat to the legal sector. However, should there be a downturn, we can take reassurance from the fact that Manchester has always fared better than any other regional city in such a climate and at the moment has a record number of schemes on site.
Also, many of our clients are of the type who will take advantage of a downturn to become more acquisitive taking advantage of less competition and the ability to get land at a better price.
In any event, there is every possibility that there will be more activity than we think as people with cash to spend get into action once the position on Brexit is resolved. Property companies need to do business, they can’t stand still for ever!