Search Acumen report: Commercial Real Estate volumes grew by 20% since 2016

Contrary to some doom-laden headlines we’ve been seeing in the last year, our new data-driven study found that the commercial real estate sector is healthy across England and Wales.

In June 2019, we published our commercial real estate report examining the trends in transactions in non-residential properties in England and Wales using HM Land Registry’s (HMLR) public Price Paid Data (PPD).

On the one hand, the results were unsurprising– London boroughs dominate the list of high-value transactions both in terms of sales and growth – but there were some welcome surprises too: Looking at the league of 13 cities that saw over £1bn of real estate investment in 2018, cities such as Manchester, Birmingham, Leeds and Nottingham all made the list, a clear sign that commercial real estate sales are buoyant outside of the capital.

But for many real estate lawyers, the interest in the figures will be in the volumes of transactions, not their values – and here we can see a very interesting story indeed.

Figure 1 – Areas of England and Wales with £1bn+ of Commercial Sales

Ranking 2018 Local Authority District Number of transactions, 2018 Total price paid, 2018 Average price paid Ranking 2017 Ranking 2016
1 City of Westminster 1,175 £7.92bn £6.74m 1 1
2 Camden 642 £2.62bn £4.09m 3 2
3 Tower Hamlets 938 £2.47bn £2.64m 7 8
4 Southwark 872 £2.19bn £2.51m 5 5
5 Kensington and Chelsea 620 £1.98bn £3.19m 8 3
6 City of London 149 £1.85bn £12.44m 4 4
7 Manchester 1,841 £1.66bn £901k 10 10
8 Leeds 2,072 £1.65bn £796k 13 12
9 Birmingham 2,807 £1.58bn £564k 9 7
10 Barnet 1,034 £1.14bn £1.1m 16 16
11 Islington 505 £1.06bn £2.11m 19 15
12 Wandsworth 840 £1.06bn £1.26m 14 6
13 City of Nottingham 945 £1.05bn £1.11m 34 67

Source: Search Acumen analysis of HM Land Registry data

Commercial Real estate volumes tell a story of growth

For three years now, business news in the UK have been dominated by reports on speculations about the impact the Brexit referendum had on investment in the UK, usually coming to the conclusion that amid the ongoing uncertainty, investment into nearly every sector has ground to a halt.

But the commercial real estate sector in the UK has been more nuanced. Although there has been a muted dip in volumes from 2017 to 2018, non-residential transaction volumes have grown by 20% since 2016, and nowhere faster than in the North: In 2018, the top five cities with the highest commercial real estate volumes in England and Wales, are all part of the Northern powerhouse. With projects like HS2 already underway, we’re expecting this growth in the North only to accelerate, as businesses and investors look for viable options north of the Watford Gap.

Figure 2 – Top 10 Areas Based on Volumes, 2016-18

Ranking
2018		 Local Authority District Number of transactions, 2018 Total price paid, 2018 Ranking 2016 Ranking 2017 % change in number of transactions,
2016-2018
1 Birmingham 2,807 £1.58bn 1 1 24%
2 Liverpool 2,392 £0.82bn 2 2 15%
3 Leeds 2,072 £1.65bn 4 3 13%
4 County Durham 1,868 £0.84bn 6 6 24%
5 Manchester 1,841 £1.66bn 3 5 2%
6 Cornwall 1,721 £0.62bn 7 4 26%
7 Bradford 1,465 £0.28bn 5 7 -14%
8 Croydon 1,276 £0.75bn 16 17 29%
9 Sheffield 1,235 £0.83bn 11 8 15%
10 Cheshire East 1,216 £0.52bn 18 14 27%

 

The Northern Powerhouse driving volumes

Birmingham and Liverpool were found to hold the top two spots for most commercial real estate volumes each year since 2016. But developments have been gearing up across the North in the past couple of years, with Leeds, County Durham and Manchester with high numbers of commercial real estate transactions from 2016 to 2018.

As plans for improved infrastructure links between Manchester and Leeds begin to shape up and HS2 continues to progress it’s likely that we’ll continue to see strong transaction numbers come out of the North of England. For commercial law firms looking to diversify their regional portfolio, this is great news – and a clear call to action on where to look for future opportunities.

 

Written by Caroline Robinson, Commercial Real Estate Business Development Manager, Search Acumen

 

Kindly shared by Search Acumen