Urban regeneration and economic sustainability of office market: the case of Manchester, UK

Abstract

The market impact of planning policy became the focus of the debate on statemarket relations (Heurkens et al., 2015). This research aims to expand this debate by employing a conceptual framework of market sustainability to ask whether regeneration policies have assisted Manchester office market evolving sustainably in the notion of market maturity, investment competitiveness and economic resilience. Since the late 1970s, property-led regeneration has been one of prevailing planning instruments expected to deliver economic growth through real estate development. Despite receiving criticism on lacking the social focus, the main purpose of property-led regeneration is to foster economic development of cities; however, little attention is drawn to test the policy outcomes in the context of economic sustainability. The investigation upon the historical evolution of policy impact on property market explains the long-term effect of economic sustainability reflecting the extent of market maturity, competitiveness and resilience since the behaviour of real estate market is highly sensitive to cyclical movements in economy indicating the various concerns over investment risk. A quantitative method is employed by constructing the regeneration office index by collecting rental value of office buildings in Manchester provided by CoStar. Office market in Manchester is an interesting case since it expanded substantially from the 1980s and arguably claimed to be the second largest market outside London by the late 1990s as a popular real estate investment hub for institutional investors. The research suggests that this market transformation is likely attributed to the city's regeneration strategies, which intentionally enlarged the scale of office market particularly since the 1980s. Empirical evidence from this study suggests that entrepreneurial regeneration strategies led by the City Council over time did not increase the level of systemic risk through the financialization of property market. Office market in Manchester as a whole demonstrates signs of sustainable performance.