Regional Revolution



What a difference 12 months can make! The sun came out across the regions during 2014 with significant increases in capital market and leasing activity, leading to markedly lower yields as investors competed for a limited pool of quality stock, and materially lower incentives as tenants soaked up the last of the quality space built before the recession. Investment volumes were up by almost 15% across the regions and the share of the total for the regions rose from 46% to 55%.
 
In the major regional city centres, cranes are appearing, a sure sign of renewed confidence and activity. In certain sectors and locations, speculative development is underway with more in the pipeline. We expect to see further substantial activity as 2015 unfolds.

Devolution is paving a new way

The referendum in Scotland was a watershed, not just for the Scots, but in the way it has accelerated the pace and direction of regional devolution across the United Kingdom. Those city regions that are without a combined authority, and/or a single city region Mayor, are coming together to ensure that they have a local governance structure that will allow them to benefit from devolution of power and funds in what is certain to be one of the most important themes to impact regional markets in a generation.

Connectedness is essential to future success

Devolution on its own is not the answer; there must be sufficient mass and scale to our city regions so that they can compete effectively, nationally and internationally. To help build and support their growth and development, they need connectivity across ports, airports, roads, rail and super-fast broadband. Broadband has become the fourth essential utility, alongside electricity, gas and water. Broadband is now at the heart of connected villages, towns, cities, regions, nations and the world.

Investment in HS2 will bring people and business closer

Once developed, High Speed Two (HS2), Britain’s planned new high speed rail route, will better connect the regional cities across the North, the Midlands and the South; but HS2 is

as much about network capacity, as it is about speed and connectivity. Developments surrounding HS2 stations are expected to boost the region’s employment, housing and commercial markets. Following completion of HS2, two-thirds of the population of North England will be within two hours of London. We are already seeing positive impacts of this important infrastructure development on activity in the regions through which it will run.

One North

One North is a strategic proposition led by the city regions of Liverpool, Manchester, Leeds, Sheffield and Newcastle who are working together to develop a transport plan which will integrate HS2 with the existing rail network to transform connectivity across the North. Already the need has been identified for a northern east-west high speed rail link.

Scottish Cities Alliance

The Scottish Cities Alliance, a collaboration of the seven Scottish cities and the Scottish Government, is bringing together Glasgow, Edinburgh, Aberdeen, Dundee, Inverness, Stirling and Perth to attract external investment, stimulate economic activity and create new jobs and business opportunities.

Combined Authorities

Following the theme of co-operation across wider economic areas, the West Midlands announced that five local authorities would work to create a new “super council” through an alliance between Birmingham City Council, Walsall, Sandwell, Wolverhampton and Dudley. Solihull and Coventry have also been invited to join.

This alliance is similar to the Greater Manchester Combined Authority (GMCA) which was created in April 2011 to build on the work of the Association of Greater Manchester Authorities which was established in 1986. The GMCA consists of ten local authorities with powers over public transport, skills, housing, regeneration, waste management, carbon neutrality and planning permission across Manchester, Bolton, Bury, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford and Wigan.

In April 2014 the cities of Liverpool, Leeds and Sheffield created their own city regions. The Liverpool City Region Combined Authority draws together six authorities (Liverpool, Halton, Knowsley, Sefton, St Helens and Wirral).

The Sheffield City Region comprises nine local authorities (Sheffield, Barnsley, Bassetlaw, Bolsover, Chesterfield, Derbyshire Dales, Doncaster, North East Derbyshire and Rotherham) and the West Yorkshire Combined Authority brings together the six authorities (Leeds, Bradford, Calderdale, Kirklees, Wakefield and York).

Recently, Bristol Mayor, George Ferguson, has challenged the councils in the Bristol area to put aside political sensitivities and combine to share services to attract government funding to the region, and there is talk in the press of Portsmouth, Southampton and others forming a Solent City combined authority.

Finally, Glasgow and seven other local authorities have come together in the Glasgow and Clyde City Deal covering Glasgow, Inverclyde, East Renfrewshire, Renfrewshire, East Dumbarton, West Dumbarton, North Lanarkshire and South Lanarkshire.

Providing real choice

For the first time in our working lives, there are signs that the younger generation will have a real and greater variety of choice. The new city regions across the country will offer greater vibrancy for living and working, each with unique and distinct possibilities. While some regions are further along this development path, the direction of travel is clear and the momentum is building for all. These are exciting times for our leading regional cities.

We’re working closer than ever

Last year we brought our offices in Glasgow and Edinburgh closer together to advise clients across Scotland through an integrated service. As we move into 2015, we are already aligning our business to the changes in the North with the opening of an office in Liverpool.

We’re here for you

The key to delivering success for our clients in the regions is in marrying up the knowledge and experience of our local teams with the finance and investment that so often comes via London. Our local teams and their senior directors have lived and worked in their markets for many y

ears, building up a wealth of relationships and market insights. They really know their markets and where they are heading. One call is all it takes to draw on these resources.

What we’ve been helping clients with

In this review, we delve into what is happening in each of the regions, and where the opportunities are for you.  We also highlight a variety of deals and projects we have worked on with our clients.

Here’s a quick highlight of a handful of projects across the regions which have seen us bring together teams in our national practice to deliver great results for our clients.

Scotland
On behalf of Moorfield Real Estate Fund III, we advised on the acquisition of the £34.45m Aberdeen Energy and Innovation Parks, which comprise 200,000 sq ft of multi-let office and industrial accommodation for over 80 companies and nearly 2,000 employees.  

Yorkshire & North East
We advised St Modwen on the investment acquisition of Billingham Town Centre in Teesside, which comprises more than 322,000 sq ft of retail and ancillary office space, as well as 46 residential flats.  

North West
We have been appointed to advise on one of the UK’s biggest regional redevelopment project, the £800m NOMA scheme in Manchester City Centre.  

Midlands
Brokered 60% of the investment deals done in Birmingham in 2014.  

South West
Further to an instruction in 2013 to acquire 60 units for Screwfix, we were once again instructed to acquire a further 60 units in 2014.  

We hope you enjoy the rest of the read. If you have any comments or questions, please feel free to get in touch with us.

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