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The future of London as the UK’s centre of everything has come under fire from the media. It seems everyone is out to slam London as overpriced and lacking in opportunity. It’s the simple economic law of supply and demand which has forced property prices in the capital to skyrocket. It’s thought that the city needs 50,000 new houses every year to keep up with the influx of migration and population growth but 2014 saw only 18,000+ constructed. As property prices soar way above inflation it pushes the cost of living up along with it.
Unfortunately for small businesses the rise in costs is not matched by the rise in turnover and for some, business in London has become unviable. So if the bludgeoned small businesses choose to move away from London, where will they go? Aside from the usual approach of simply moving to an affordable town of commutable distance from the capital, like Reading or Luton, SME’s of the capital could choose to populate one of the country’s emerging urban hubs like Manchester.
Once the furnace of the north, Manchester was the jewel of industrial Britain and the world’s first industrialised city. After WW2 manufacturing declined and the city was forced to reinvent itself. After years of renovating and developing the old cotton mills and warehouses, Manchester is already attracting people and businesses by its new vibrant image.
The Manchester of today is a very different place to that of 40 years ago. The UK’s second city is the new ‘go to’ place for investment outside of London. In terms of inward and foreign investment, Manchester is increasingly closing the gap to London, even if that gap is still extremely large.
Rental cost is the major reason for businesses leaving London, more understandable when we compare the average rents of London and Manchester. For the first three months of 2015 the average monthly rental for London was £1,436 whilst Manchester was £874.
The main reason Manchester isn’t drawing more attention is the monopoly that London holds over the country’s business operations. Still the financial hub of the UK, businesses are less reluctant to leave the capital in fear of losing the benefits that London has to offer. Fortunately HS2’s phase 2 would link Manchester to London in a travel time just over an hour long. Whilst HS2 phase 2 will not be complemented until 2032 at the earliest, can businesses afford to miss out on the opportunity that Manchester provides? With London potentially only an hour away, we could see the capital benefits spread to the north of England.
Under the current Tory government the North is set to thrive in the coming years. George Osborne’s vision of a Northern Powerhouse sets out the plan to increase connectivity between the northern cities of Manchester, Leeds, Liverpool and Sheffield. There are over 2 million graduates in this band of the country, an undeniable wealth of talent to fuel business growth.
The Northern Powerhouse has already seen the first wave of influx with the likes of the BBC moving into Media City and boosting the areas technological and creative enterprises. Direct comparisons can be made between the development of the Salford Quays and the London Dockland development in terms of revenue generated for the area. It’s time London recognised the competition and that the north is emerging as an attractive place to live and do business.
If you are looking for commercial property insurance, call us on 0800 042 0401.