Salford in the overall economic climate lead

Salford
Quays is seen as one of the greatest urban land regeneration projects in the UK
and shows how a declining market can be revitalised into a booming market in a
short period of time.

 

The
Salford Quays are the former Manchester Docks which are located at the eastern
end of the Manchester Ship Canal. In 1984, the Salford Quay docks closed as a
result of trade declining. This led to warehouses and factories closing and
unemployment in the area became a major problem. In 1985, the Salford Quay
Development Plan came into action as the land surrounding the docks had been
left empty and derelict. The Salford Quay Development Plan was introduced as the
council wanted to create a new quarter of the city which was related to the
water and the canal’s past use to give the area a unique character.

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In 1981 parts of Salford Quays were designated an
Enterprise Zone (EZ) to last for 10 years and with a view to attracting investment
into the area by way of financial incentives for occupiers and developers.
This, coupled with local, central and European investment in infrastructure
projects acted as a catalyst to encourage a number of commercial and
residential developments in Salford Quays. These incentives took the form of
tax breaks for developers and rates free periods for occupiers. Although
development stalled during the recession of the early 1990’s, lottery funding
for the Lowry Arts Centre in the late 1990’s and a general improvement in the
overall economic climate lead to further construction of new residential and
commercial schemes. Shepheard Epstein and Hunter architects wanted the area to encourage
people to work and live there by creating a high quality environment. The
redevelopment has resulted in new residential, commercial offices, leisure and
recreational buildings.

 

The
Salford Quays are considered to be “the Canary Wharf of the North” now, after
over 30 years of redevelopment as house prices and office rents are some of the
highest in Manchester due to the demand, which has been aided by transport into
Manchester city centre, MediaCityUK and The Lowry theatre and shopping centre.

 

Firstly,
the transport links to Manchester city centre were improved to the Quays making
it is easier for people to commute to and from the city centre. The first
Metrolink line was introduced in 1999 as phase 2 of the 1987 proposals. This
phase of the Metrolink was heavily privately invested compared to phase 1,
costing £160,000,000 with no funding from the government. Introducing this
Metrolink connected Salford Quays and Manchester City Centre making the quays a
more desirable place for people to live while still allowing them to commute
into the city centre for work/leisure. The Metrolink can stimulate economic
growth but only with housing, work and leisure provisions in place as it
provides a modern, efficient way for residents to travel to jobs outside the
area, it also provides access for workers into the area and provides a useful
theme for marketing the area.

 

 

 

 

 

 

 

Figure
1 shows the different types of investment which has gone into the different
plans and developments to get the Quays to the stage it is at today. The area
has been heavily funded by private investors compared to public funding. Over 7
times more private funding was invested In the area than public.

 

Another
part of the infrastructure which was improved in Salford Quays was the
introduction of a new road which connects the Quays to the M602 at Junction 2,
making it quicker and more convenient to access the area by car. Improving the
road link will entice more businesses and people to locate there due to the
ease of access.

 

The Metrolink was further extended in phase 3 for the new
development of MediaCityUK in 2010 so that workers for the new development
could commute to work and for the transport link to be ready for the completion
of the site. The first phase of the MediaCityUK development was completed in
2011 and is one of the biggest developments in the Salford area. It was granted
planning in 2007 for the Peel Group and Legal & General (private investors)
and is one of the largest urban regeneration projects in the UK at 200-acres of
mixed use development.

 

The
BBC confirmed its move to MediaCityUK in 2007 for completion in 2011 as they
wanted to decentralise the company from London. ITV Granada also completed the
first phase of its move to MediaCityUK 2 years later in March 2013. These large
anchor tenants were crucial to the new, innovative development’s success as
they helped stimulate and attract a large range of media-related activity as
there are 40 other media and non-media companies based there. This activity
will be a huge benefit to the Salford and the North-West region as it brings a
potential £1.5bn to the economy.

 

Another
benefit of MediaCityUK would be that there is opportunity for an extra 15,500
jobs and 1,500 trainee posts per year. This gives the locals an opportunity to
be part of the huge development on their doorstep and inject money back into
the local economy. The professionals who are brought to the area to work for
the high-tech companies will also help boost the local economy as they are
likely to buy new houses and spend money in Salford Quays and Manchester. It is
evident that the introduction of MediaCityUK will boost the local economy as
the average house price (£144,614) in 2016 was twice the national average, rising
13.1% from 2015’s figure. When the 2,300 BBC employees first started relocating
to the area from London in 2012, the house prices rose four times faster than
anywhere else in the UK (Figure 2). This shows that the introduction of the new
development has caused an increase in demand for housing, as there has been an
influx of people wanting a house thus boosting the local housing market and
economy. 

 

 

 

 

 

 

 

 

 

 

Figure
2 shows the sudden increase to house prices in February 2012 in the Salford
area when the BBC employees started to move to the area from London. It shows
that the demand increased due to the house prices rising as there would have
been limited supply for the large influx of new home buyers. The house prices
remained high after the sudden surge of demand, in December 2011 the average
house price was £86,000 and a year later the average house price was £92,000
with a peak of £95,000 in May 2012.

 

There
has been a large demand for office space in Salford Quays over the past 15
years as the key selling point for the Quays is that the prices are much lower
than the core of Manchester meaning that companies can remain competitive as
rents in the centre have risen considerably. In Salford Quays, Grade A office
space is £24 per sq ft and in central Manchester they are £34 per sq ft. This
shows that Salford Quays may start to see a large increase in take-ups as
companies may decide to save themselves some money by being out the city
centre, while remaining only a short MetroLink ride away.

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure
3 shows the take-up of office space over the past 15 years in Salford Quays.
2015 was a crucial year for the Quays as it revitalised the office market
putting it back on the map as an office location. In 2015, there was a total of
582,477 sq ft of office space sold which was a drastic increase from the
previous year as there was only 150,000 sq ft sold. The difference between the
two years is an increase of 283% and also 159 per cent up over the 10-year
average. The issue which arises as a significant amount of office space is
being taken up in the Quays is that demand may start to outweigh supply causing
the office prices and rents to increase which ultimately might cause the USP,
of cheaper rents than central Manchester to diminish. This may have a profound
effect on the office market in Salford Quays if the core of Manchester became the
more desirable place to be located as a business, so keeping the rents below
the average for the centre is crucial to preserve the rental balance.

 

To ensure the rental balance is
preserved, Salford Quays needs to keep the supply of housing continuous to meet
the demand.

 

Figure
4 shows the development which is in planning, has planning permission granted
and offices under construction in Manchester. Both MediaCityUK and Salford are
the highest out of the areas outside of the city centre. There is around
4,500,000 sq ft of offices in planning and with planning permission granted in
the MediaCityUK and Salford area showing that provision to meet the large
demand has been put in place. The fact that office prices and rents do chart
proves that the Quays is being seen as a desirable location for offices due to
the high amount of developments under planning, so developers are attempting to
meet the demand. The only issue is that these offices are not yet under
construction so if there was a sudden surge of demand then office prices may
rise as construction is a long process and can have many delays.

 

Due
to the large increase of people moving to Salford Quays for work, it has also
boosted the amount of new homes needed in the area to meet the demand which
should mean that house prices won’t rocket.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Figure
5 shows the estimated number of jobs at Salford Quays between 1987, when the
docks first closed to 2030 projections into the future. This shows that the
population is going to constantly increase with the investment in commercial
property in the area causing more people to work there and consequently will
need housing. There is a large demand for both commercial and residential real
estate causing lots of money to be poured into the economy benefiting the
locals and the region.

Figure
6 shows that more residential housing provisions have been put in place to deal
with the high demand caused from the increase of people working in MediaCityUK
and Salford. From the bar chart it shows that MediaCityUK and Salford has more
planning permission than any other area of Manchester other than the core. From
figure 4 and 6 it can tell us about the different planning policies that were
in place as the residential had been granted more planning permission than the
commercial development pipeline this would be in place to ensure there’s enough
housing before the commercial real estate can expand.

 

In
conclusion, the regeneration of Salford Quays is a prime example of
how Local, Central and European Government intervention by way of incentives
and investment in infrastructure can stimulate a market and encourage the
regeneration of previously derelict areas. The designation of Salford Quays as
an EZ stimulated both supply and demand and was the early catalyst for the
establishment of Salford Quays as a recognised residential and commercial
location.