Avison Young’s UK Cities Recovery Index shows significant sector recovery across Northern cities

Avison Young’s UK Cities Recovery Index shows significant sector recovery across Northern cities 10 Jun 2021

Latest data shows that Leeds, Liverpool and Manchester are beginning to bounce back, with the Hotel & Leisure Sector enjoying a surge in activity following easing of restrictions.

According to the latest data from Avison Young’s UK Cities Recovery index, multiple sectors in Northern cities including Leeds, Liverpool and Manchester are performing at the highest levels since initial lockdown measures were put in place.

Avison Young created the UK Cities Recovery Index to help monitor the way in which the coronavirus pandemic impacted the UK’s major cities. It enables up-to-date assessments and analysis of the rate and trajectory of the recovery and identifies trends that will determine the future of the property sector, and of society as a whole.

The Sector Indices are combined into an overall Recovery Index score, which illustrates the evolution of urban impact and recovery over time since 29th February 2020, before COVID-19 hit the UK.

Northern cities were some of the hardest hit during the lockdown periods, with Leeds, Liverpool and Manchester all experiencing some of the strictest social distancing measures during the final quarter of the year. Now, over twelve months on since the first lockdown began, and following weeks of eased restrictions, these Northern Powerhouse cities are showing signs of recovery.

As anticipated, following the lifting of restrictions on 17 May, the Hotels & Leisure Sector Indices for all three cities have seen notable spikes of activity, with Leeds reaching 118.6 as of 7 June, the first time the sector has exceeded its pre-pandemic baseline. Liverpool’s figure is currently standing at 116.9 and is expected to rise further as customers continue to return to the city centre. Liverpool also recently benefitted from being the first city to host a government-led trial for large events using rapid testing, with business and music events taking place in May. While in Manchester, there has been an exponential increase in the index data, from 27.3 on the 11 April to 118.2 on 7 June, thanks to a rebound in OpenTable restaurant bookings, pub sales and box office revenue.

Throughout the pandemic, the Residential Sector Index across each city has been strong and is predicted to remain so until the end of the extended stamp duty holiday on 30 June. Over the past fortnight, Leeds has experienced its highest peak so far, reading 156.4 on 7 June, suggesting that the extended tax break may continue to provide strength in the market over coming months. Liverpool’s market activity, also increased over the last week to 142.2 and is expected to remain strong, while Manchester reached a near high of 144.6, well above its pre-covid level.

Although still subdued compared to other sectors, there has been an improvement in the Return to Office Sector Index for Manchester, increasing from a low of 36.2 in January, to 50.2 as of 7 June. Leeds is performing at a similar level, with the index measuring at 51.7. Meanwhile, Liverpool is experiencing a stronger growth, with the Return to Office Sector Index reaching 61.0, despite no change in government advice on working from home.

The Commercial Activity Sector remains turbulent under the strains of the pandemic, but the Index across all cities is continuing to increase, with Manchester’s Index reaching 98.2 on 1 June. However, Liverpool and Leeds have both exceeded their pre-pandemic baseline, reaching 110.6 and 100.2, respectively.

Claire Paraskeva, managing director and principal at Avison Young’s Leeds office, said: “It’s no surprise that the lifting of restrictions has done wonders for the recovery of Leeds, and for the nation as a whole. Our Overall Index now stands at 108.6 and this has been primarily driven by the increases in our Hotel, Leisure and Mobility sector indices – the latter of which is the highest reading in any of the cities covered by our UK Cities Recovery Index.

“Like the Return to Office Sector, the Retail sector index has also been slower to recover. Online trading and structural changes may have affected the sector as a whole, but that’s not to say the Index will not improve from its current reading of 91.0. The boom in online retailing means that it is sadly inevitable that some stores will be unlikely to return to their pre-pandemic levels of trading without making significant adaptions to their business models and offerings. Innovation across these struggling sectors will be key in order to attract workers and shoppers alike, back to our city centres.”

Stephen Cowperthwaite, principal and managing director at Avison Young in Liverpool, said: “Since lockdown restrictions were lifted in the UK, Liverpool has continued to sit front and centre in the region’s recovery, which is once again showing the resilience and pioneering spirit of our city.

“The government trial, which included the live concert at Sefton Park, the UK’s first post-covid nightclub event at Bramley-Moore Dock, as well as The Good Business Festival, saw thousands of individuals come together with no masks or social distancing, was a massive step forward in aiding science-backed research so that we can get one step closer to returning to pre-pandemic life.

“It has been tough for the Hotel and Leisure Sector, which has been evident throughout these Indices, but we expect these numbers to continue to rise. The city centre is getting busier and people are eager to support their local hospitality industry and it’s a joy to see some normality in our streets.”

Chris Cheap, principal and managing director at Avison Young in Manchester, said: “The UK Cities Recovery Index data for Manchester tracked the National Index for much of the crisis, but has now reached an encouraging 102.3, which is the highest level since the pandemic began.

“Looking across the northern regions, it’s interesting to see Manchester more closely mirroring larger cities such as London in its lag on the Return to Office Index, especially since the Mobility Index has seen a huge improvement from the beginning of the year, when the figure stood at 41.3 but is now at 105.1.

“The results from the latest business confidence surveys have all recovered from their six-month low in January, with Manchester now recording 112.4 at the end of April, compared to 37.2 at the end of April last year and above the previous high of 108 at the end of July 2020. These results, as well as the heightened interest in commercial office space makes me confident that the second half of the year will be more prosperous for Manchester.”

Gavin Brent, managing director, leisure at Avison Young, said: “There is a significant amount of activity across the leisure sector and much of it is good news. Of particular note is that two major budget fitness club operators, PureGym and Gym Group, have reported a much quicker recovery than anticipated, both in terms of membership recovery and higher usage of their gyms. Both these operators are still opening clubs and we are acting for other operators who are looking to open clubs or expand their existing facilities.

“The holiday property sector continues to boom, with a 25.5% increase in spending reported on staycations in May, and a number of our clients are forecasting record trading levels in June, despite requirements for social distancing until at least the 21st.

“We have also seen a recent uptick in activity from banks and institutions, particularly following the lifting of the Material Valuation Uncertainty Clause and we expect to see increasing levels of M&A activity, as investors and well-funded leisure operators are positioning themselves to take advantage of the sector’s recovery.

“However, some leisure operators, like nightclubs, are yet to open and others, like city centre bars, are struggling to operate at levels which make them viable, given not only the limited return to office but also the need to accommodate social distancing.

“The race between the vaccine rollout and the anticipated re-opening on 21 June is an important one for the sector. There is also increasing concern over accumulated debt and rent arrears, in particular, with the impending lift of the moratorium and this may lead to more CVAs and restructuring.”

The UK Cities Recovery Index can be accessed using Avison Young’s unique and intuitive platform with data that is constantly updated via the Daily Activity Recovery Tracker (DART) - a grouping of the highest frequency indicators, which give an early view of the likely trajectory of the full Index. Avison Young’s UK Cities Recovery Index can be found here.

For the latest insights on our road to recovery, read our UK Cities Recovery Index here.

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