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Urban regeneration and economic sustainability ofofficemarket:thecaseofManchester,UKChien-LingLo,UniversityCollegeLondon,UKAbstractThemarket impactofplanningpolicybecamethe focusof thedebateonstate-market relations (Heurkens et al., 2015). This research aims to expand thisdebate by employing a conceptual framework of market sustainability to askwhetherregenerationpolicieshaveassistedManchesterofficemarketevolvingsustainably in the notion ofmarketmaturity, investment competitiveness andeconomic resilience. Since the late 1970s, property-led regeneration has beenone of prevailing planning instruments expected to deliver economic growththroughrealestatedevelopment.Despitereceivingcriticismonlackingthesocialfocus, the main purpose of property-led regeneration is to foster economicdevelopment of cities; however, little attention is drawn to test the policyoutcomes in thecontextofeconomic sustainability.The investigationupon thehistoricalevolutionofpolicyimpactonpropertymarketexplainsthelong-termeffect of economic sustainability reflecting the extent of market maturity,competitivenessandresiliencesincethebehaviourofrealestatemarketishighlysensitivetocyclicalmovementsineconomyindicatingthevariousconcernsoverinvestment risk. A quantitative method is employed by constructing theregeneration office index by collecting rental value of office buildings inManchester provided by CoStar. Officemarket inManchester is an interestingcasesinceitexpandedsubstantiallyfromthe1980sandarguablyclaimedtobethe second largestmarket outside Londonby the late 1990s as a popular realestateinvestmenthubforinstitutionalinvestors.Theresearchsuggeststhatthismarket transformation is likely attributed to the city’s regeneration strategies,which intentionally enlarged the scale of office market particularly since the1980s. Empirical evidence from this study suggests that entrepreneurialregeneration strategies led by the City Council over time did not increase thelevel of systemic risk through the financialization of property market. Officemarket in Manchester as a whole demonstrates signs of sustainableperformance.Keywords: Regeneration, Economic Sustainability, Office Market, MarketMaturity,Competitiveness,ResilienceIntroductionThemarket impactofplanningpolicybecamethe focusof thedebateonstate-market relations (Heurkens et al., 2015). Since the late 1970s, property-ledregeneration has been one of prevailing planning instruments expected todeliver economic growth through real estate development. Office market inManchesterisaninterestingcasesinceitexpandedsubstantiallyfromthe1980s

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andarguablyclaimedtobethesecondlargestmarketoutsideLondonbythelate1990s as a popular real estate investment hub for institutional investors. Theenormous growth of market size in office sector has been deliberatelyencouraged and facilitated by the regeneration policies of Manchester CityCouncilsincethe1970ssincetheCouncilnotedthatthegrowingfinanceservicescouldbethenexteconomicengineforthecitytoreviveitseconomicprosperity.Office markets attract a substantial volume of international real estateinvestmentinthelargecitieswhichrelyheavilyonthefinancialservicessector.The dual concentration of office market investment and financial servicescentrespointsout the likelyadverseeffectdue to less investmentbenefitshasarisen fromweakenedeconomicdiversification(Stevensonetal.,2014).LizieriandPain(2014)proclaimthat,“Systemicriskarisesthroughtheprocessofrealestateinvestmentinsuchcitiesdueto the locking together of occupational markets (functionally specialized infinancial services activities), investmentmarkets (through acquisition of offices),supply markets (both through demand drivers and the supply of finance fordevelopment),andrealestatefinance(throughpropertyascollateralforlending)”.Guironnet and his colleages (2016) observe that investors’ expectations oncommercial properties are met by translating investment risk into the builtenvironmentthroughregenerationdevelopment.Undertheincreasingausteritypressure, the shortage of funding drives many city governments to rely onproperty markets, whereby regeneration development becomes a platform toturn properties into investment assets for financial investors as a form ofpropertymarketfinancialization.Since the late 1970s, property-led regeneration has been one of prevailingplanning instrumentsexpected todelivereconomicgrowth throughreal estatedevelopment. Despite receiving criticism on lacking the social focus, themainpurpose of property-led regeneration is to foster economic development ofcities; however, little attention is drawn to test the policy outcomes in thecontext of economic sustainability. This research focuses on the analysis ofquantitativedata to evaluate the level ofmarketmaturity, economic resilienceand competitiveness for determining individually whether the regenerationofficemarket has reached itsmature state; how resilient themarket has beenduringcyclicaleconomicdownturnsaswellasitscompetitivenessforattractinginwardinvestment.AllthesefindingsfeedintoacollectivereflectiononwhetherthewholeManchesterofficemarketinthecitycentrebecamemoresustainableoverthedesignatedperiod.The structure of this paper is arranged by firstly introducing the essentialelements of constructing an index including the rationale of selecting RentalValue as the market indicator; the use of transaction-based data and CoStardatabank;theboundaryofresearchareaandregenerationareas;theprocessofconstructing a real estate index; then the concept of property cycles. Then themeasurement variables and data analysis are explained following with theconclusionsectionandfinallythelimitationofthedatacollected.

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RentalValueasthekeymarketindicatorAccording to Peter Wyatt, (2013), the typical appraisal information such asmarketindicatorsinclude(1)currentmarketrents;(2)rentalgrowth;(3)yields;(4)movements inmarket indices.For thepurposeof this researchanddesign,theemphasis isplacedonanalyzingRentalValueandRentalGrowthaswellasmarketmovementsoftheindices.Property as an investment has to compete with other asset classes primarilyequitiesandbonds. Institutional investmentsheavily concentrateon theprimecommercial markets and are held in a form of portfolio asset, which is animportant element for the observation of institutional investor behaviour. Forportfolio information, one of the key criteria in determining allocations acrosstherespectiveasset classes isperformance-basedmeasureof risk (Adairetal.,2005, p151;Wyatt, 2013). Consequently, the focus is placed on analyzing thelevelofinvestmentriskbasedontheformulaofcalculatingrentalvalue.Asexplainedinthepreviouschapter,therationaleofchoosingrentsoverotherpopularvariablesformeasuringmarketperformance,suchasreturns,yieldsorcapitalvaluescomesfromthefactthatrentleveldeterminestheprofitabilityfordevelopersand investorsandhence the levelofnewdevelopments (JadeviciusandHuston,2017;Barras,1984).Alsosincerentisusedtoestimatethevalueofthepropertyinthecapitalmarket, itplaysacentralroleinbringingfourinter-relatedcommercialpropertymarkets(user,investment,developmentandland)intosimultaneousequilibrium(Balletal.,1998).Transaction-basedrentalvalueandCoStardatabankThedataoftherealtransactionsfor4starofficespaceswerecollectedfromtheCoStar property database including actual lettings, rent reviews and leaserenewalsbutexcludingtheaskingprices.Thisresearchintendstoobservepartlythe behaviour of institutional investors who demonstrate certain habit-persistent or adaptive behaviour during their decision-making process ininvestment. They tend to prefer prime market when considering investing inoffice market. According to this requirement, 5 and 4 star office buildingsclassified in the CoStar databank are qualified (CoStar, 2017). However, thelimitationofmuchlowernumberoftransactionsof5starofficesuggestsgreaterimperfectionduetothesmallerpoolofsamplesize.TheCoStarBuildingRatingSystemisanationalratingforcommercialbuildingsonauniversallyrecognized5Starscale.Theelementsofanofficebuildingweresegmented into five main categories: Architectural Design, Structure/Systems,Amenities/Management, Site/Landscaping/Exterior Spaces and Certifications.Thecharacteristicsofa4-Starofficebuildingareverysimilartoa5-Starbuildingwith a slightly lower quality in terms of building age. It is useful to list thedefinitionsforboth5-starand4-starofficebuildingasfollows(seetheAppendix1).

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Analysing prime rents has at least two uses: first, it provides a means ofmeasuringthevaryingeffectsoftheinteractionofsupplyanddemand;second,itgives an impression of comparative rental growth between different areas.However,onedifficultyinanalysingrentsinanareaforacertainperiodisthatbecause they represent the state of the market at each reference point, theinclusionofprime rents forprimeproperties leads to anoverstatementof therental growth exhibited by a particular property between any two dates andignoresobsolescence(Stapleton,1989,p59).ResearchareaandregenerationareasAsmentionedinthepreviouschapter,thedefinedresearchareaadoptsthesameboundarydefinedinthis1967report.ItisboundedbytheMancunianWay,RiverIrwell and a line (following now the inner ring road) to the North of GreatAncoatsStreet,comprisingabout1100acres;atthattime,morethan80%oftheland use of the designated area was for business and retail and 20% forindustrial use. There were six redevelopment areas (labeled with A – F, seeFigure 1) identified in the 1967 report but this research excludes theredevelopment area further south beyond the Mancunian Way because it isfurtherawayfromtheCentralBusinessDistrict(CBD)ofthecitycentre.Figure1RedevelopmentAppraisalPlan1967andresearcharea

Figure2Four-starofficebuildings

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Figure 2 displays all officedevelopmentsconstructedby2017 (including 2017) withnew lettings, rent reviews,lease renewals and availablespace on the market withasking price. The searchrequirementsincludetherealtransaction of lettings, rentreviews and lease renewalscompletedbetween1984and2017.

TheconstructionofarealestateindexAnindexshowsnumericalchangeintheformofpriceorpercentageovertime.The indicesconstructed in thisresearchcompriseasinglevariable tohighlightinter-submarket and inter-city differences. The single statistical series avoid acommon problem of multi-variable series, which combine several variablesexpressedindifferentunitsorincategoriesofthesameunittoacommonscaleand this standardising process could eliminate certain change factors (Horn,1993,p47).MeanandmedianThe first step of index construction is to determine the annual figure for eachyear,whichnormally refers tomeanor average rental value.Meanor averagereferstothesumofthevaluesofeachofthemembersofthesampledividedbythetotalnumberinthesample;whilethemedianfigurereferstothevalueofthemiddle member of that sample. The average rental value calculated here is amean figure.Table1and2demonstrate theprocessof calculating theaveragemeanofRentalValueforeachyearandcomponentsusedtoobtainthefigures.Total value is summed up and divided by the number of transactions for thatyeartoachievetheaveragerentalvalue.Taketheyearof1990forexample,thetotalvalueis£58.92dividedby5timestransactionsthatgivesanaveragevalueof£11.78inrent.Table1CalculationformatforNon-regeneration4-starofficeRentalValue

Non-Reg/Year-Rent 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995Nooftransactions 1 0 3 4 4 5 5 1 1 4 4 3Totalvalue 6.95 0 17.95 22.12 30.75 58.2 58.92 7 13.5 36.5 51.4 28.5Average 6.95 0 5.983 5.53 7.688 11.64 11.78 7 13.5 9.125 12.85 9.5Non-Reg/Year-Rent 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007Nooftransactions 3 12 5 3 2 5 6 10 17 22 23 31Totalvalue 33 184.9 62 37 32.5 74.25 97.58 151.3 269.8 400 387.4 585.2Average 11 15.41 12.4 12.33 16.25 14.85 16.26 15.13 15.87 18.18 16.84 18.88Non-Reg/Year-Rent 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Nooftransactions 19 19 11 6 10 17 29 35 22 12Totalvalue 379.55 321.9 193.8 116 183.5 303.5 580.8 695 476.2 290.4Average 19.976 16.94 17.62 19.33 18.35 17.85 20.03 19.86 21.65 24.2

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Table2CalculationformatforRegeneration4-starofficeRentalValue

As noted in these tables, Rental Values for several years are missing, forregenerationoffice,includingtheyearsof1985,1989,1993and1994;fornon-regeneration,onlyoneyear,1985(seeTable3).Toovercomethisproblem,theserental values have to be estimated by using the previous average rental valuemultiplyingtherentalgrowthofofficemarketforthatyearprovidedbyIPD.Thismethod could increase the level of the calculation error for accuracy but theestimatedfiguresonlytakeupamarginallysmallproportionofabout7%oftotalstatistics used and this should not cause a significant impact on the overalloutcome.Table3EstimatedValue

Indexnumbersandtime-seriesdataThe concept of index numbers is explained as follows. The Index methodemployedinthisresearchcomprisestime-seriesdatathatpresentsinformationthatdepictshowavariable,forexample,inthisresearch,rentalvalues,changesover time. Time-series analysis seeks to discover the patterns underlying theseries,which can capture fluctuations reflecting the variable effects of timeonstatistical series. The basic approach of time-series analysis used here is tocompare values with different periods and markets to identify trends (Horn,1993,p58).Thismethodhas the advantageof giving theprecise figures and is therefore ausefulreferenceifonewishestotestanytheoryandseeifitpredictsaccurately.Time-seriesdatacanbeshowngraphicallyanditgivesaobviouspictureofhowthe figureshavemovedover timeandwhether the changesaregettingbigger,meaning the curve is getting steeper, or smaller,meaning the curve is gettingshallower.Alsoitprovidesareadingonwhatthelikelyfigurewouldbeforsomepointbetweentwoobservations.Furthermore,itispossibletocombinemultiple

Reg/Year-Rent 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995Nooftransactions 1 0 2 3 1 0 2 1 1 0 0 3Totalvalue 6.75 0.00 14.45 21.70 7.50 0.00 20.67 7.00 10.00 0.00 0.00 34.00Average 6.75 0.00 7.23 7.23 7.50 0.00 10.34 7.00 10.00 0.00 0.00 11.33Reg/Year-Rent 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007Nooftransactions 1 3 5 1 4 4 3 5 13 18 14 18Totalvalue 12.00 45.00 61.00 13.00 69.50 71.50 51.47 100.40 273.25 350.05 317.85 433.65Average 12.00 15.00 12.20 13.00 17.38 17.88 17.16 20.08 21.02 19.45 22.70 24.09Reg/Year-Rent 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Nooftransactions 14 9 13 12 10 15 11 16 10 2Totalvalue 333.25 165.79 263.48 254.95 191.10 323.42 243.28 378.52 231.00 49.40Average 23.80 18.42 20.27 21.25 19.11 21.56 22.12 23.66 23.10 24.70

RentalValue 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995RVaverageR4-star 6.75 7.17 7.23 7.23 7.50 9.62 10.34 7.00 10.00 9.51 9.36 11.33RVaverageNR4-star 6.95 7.38 5.98 5.53 7.69 11.64 11.78 7.00 13.50 9.13 12.85 9.50RentalValue 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007RVaverageR4-star 12.00 15.00 12.20 13.00 17.38 17.88 17.16 20.08 21.02 19.45 22.70 24.09RVaverageNR4-star 11.00 15.41 12.40 12.33 16.25 14.85 16.26 15.13 15.87 18.18 16.84 18.88RentalValue 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017RVaverageR4-star 23.80 18.42 20.27 21.25 19.11 21.56 22.12 23.66 23.10 24.70RVaverageNR4-star 19.98 16.94 17.62 19.33 18.35 17.85 20.03 19.86 21.65 24.20

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sets of time-series data on one graph to show their relative movements overtime.Time-series data are often expressed in terms of index numbers. One year isselected as the base year and this is given the value of 100. The use of indexnumbersallowsustoseeclearlyanyupwardanddownwardmovementsandtomakeaneasycomparisonofoneyearwithanother.Indexnumbersareausefulwaytopresentaseriessothatitiseasytoseehowithas changedover time, and they facilitate comparisonsof serieswithdifferentunitsofmeasurement(2010,BrooksandTsolacos,pp.21-24).Theyarewidelyused in economics, real estate and finance. Index numbers also makecomparisons of the rates of change between series easier to comprehend. Thesimplest way to do this is to construct a set of price relatives. This is usuallyachievedbyestablishingabaseperiod, forwhich the index is givenanotionalvalueof100,andthentheothervaluesoftheindexaredefinedrelativetothisandarecalculatedbytheformula𝐼! = !!

!! × 100

Anarguablymoreimportantuseofindexnumbersistopresentthechangeovertime in the values of groups of series together. This would be termed anaggregate or composite index number, for example, a stock market index, anindex of consumer prices or a real estatemarket index. In all three cases, thevaluesofanumberofseriesarecombinedorweightedateachpointintimeandan index formedon the aggregatemeasure. Three commonlyusedmethods oftheweightingschemeemployedtocombinethecomponentseriesare listedasfollows:

• Equalweightingofthecomponents;• Baseperiodweighting by quantity, also known as Laspeyresweighting;

and• Currentperiodweightingbyquantity,alsoknownasPaascheweighting.

Equalweightingevidentlyhassimplicityandeaseofinterpretationonitsside;itmaybeinappropriate,however,ifsomecomponentsoftheseriesareviewedasmoreimportantthanothers.In this research, only a single variable is required, the office rental value;therefore,thereisnoissuetoweighdifferentcomponents inaccordancetotheleveloftheirimportance.Asaresult,theequalweightedindexisemployed.Theeasiestway to formanequallyweighted indexwouldbe to first constructthe average, meaning un-weighted or equally weighted office rental valuesacrosstheselectedbuildings,whicharegivenintheTable3and4.Effectively, the equally weighting method ignores the sales information inassigningequalimportancetoallthebuildings.Thenavalueof100isassignedto

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the 1984 figure for the index £6.75 for regeneration office and £6.95 for non-regenerationofficerespectively,sothatthefiguresforallotheryearsaredividedby£6.75/£6.95andmultipliedby100(seeFigure5below).Using index numbers to measure percentage change in the index from thepreviousyear.Toworkthisoutthefollowingformulaisused:((𝐼! − 𝐼!!!)/𝐼!!!)× 100where𝐼!istheindexintheyearinquestionand𝐼!!!istheindexinthepreviousyear.ThustofindthegrowthratefromXyeartoYyearwefirstseehowmuchthe index has risen (𝐼! − 𝐼!!!)then divided by the index of the previous year(𝐼!!!).PropertyCyclesWithinamarketeconomysuchasUK,itsmarketmechanismismainlybasedonthe supply and demand theory with an assumption that through competitionbetween suppliers and demanders, the actual price, i.e.market price, could goaboveorbelowtheequilibrantnaturalprice;butforlongterm,thepriceofeverycommodity would reach its natural price (Smith, 1776; Walras, 1889; Dome,1994). Property cycles capture similar phenomenon to business cyclesmainlydescribed, “(cycles) reflect fluctuations in economic activity, with recurrentperiods of expansion followed by contractions, recessions and revivals overperiodsusuallyvaryingfrom1to12years(Horn,1993)”.Followingthesimilar functions,propertycyclescanactasmarket indicatorstoidentifyrecurringpatternsandof thechangesthatmarktheupsanddownsofthechosenpropertymarketforitsmarketexperienceandprospects.Thisleadstotheformulationoftheorisingitsmarketdynamicsforthechosensector.Governmentpolicycouldalsosignificantlyinfluencethemarketperformance.Inthe built environment sector, Government could regulate themarkets throughtheplanningsystem,initiatedirectdevelopmentchanneledthroughlandpolicyandregenerationinitiatives,andinfluencethebehaviourofpropertyinstitutionsthroughtaxationandfiscalmechanisms(p.3,Adamsetal.,2005).AsGroverandGrover (2013) observed that the possible cyclical effect of policy on propertymarkets, “Economic policy is subject to regular changes for political reasons.Cycles in thepropertymarket could therefore reflect the electoral cycle of themajor economies. Turning points might then be associated with changes ofadministration and the pursuit of different economic policies or ideologies”.They further explained the causes of property cycles, “Although endogenousfactors are necessary for the existence of property cycles, exogenous shocksincreasevolatilityandleadtothegenerationofanewroundofcycles”.Consequently, it is sensible to analyse the performance of office market inManchesterinthecontextofpropertycycles.AccordingtoHustonandJadevicius(2017),between1978and2015,therearefourcyclesidentified,seetheTable4andFigure3asfollows:1978–1984;1985–1993;1994–2003;2004–2009

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thatareadoptedasreferencecyclesforthecomparisonwithregeneration,non-regeneration office rent series as well as the office rent series for the wholeManchestertobringourtheirconformity,leads,lagsandtheirrespectiveturningpoints(Horn,1993).Table4UKallpropertyrentalseriescycletiming

Source:HustonandJadevicius,2017Inthisresearch,duetotheavailabledata,theperiodcollectedrunsfrom1984to2017, which covers the last three cycles from 1985 to 2009. The normaldistributionofbothRentalValueandRentalGrowthiscalculatedtomeasurethelevel of investment risk for each property cycle in order to assess the level ofeconomicresilienceoftheofficemarketinManchester.Figure3UKallpropertyrentalseriescycleperformance

Source:HustonandJadevicius,2017Thephenomenonofpropertycyclescanbeseeninthehistoryofdevelopment,occupierandinvestmentmarkets(Baum,2010;Barras,2009).Theserepeatablepatternsareexpressedintheformofrealestatedevelopments,rentsandyields,with these in turn driving capital values and returns,which explains the closeconnectionbetweenrentsandreturns.

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Rents have been strongly pro-cyclical with GDP. For example, Barras (2009)shows that periods of growth in GDP above the long-term trend growth havecoincidedwithperiodsofgrowth inrentsabove long-termtrendgrowth.Thenthe demand side is also pro-cyclicalwith economic growth indicators, such asGDP growth, but the inelasticity of supply means that even highly regulardemand cycles can generate irregular rental cycles. Hence rents will rise inresponse toeconomicgrowth, andwitha static supply in the short termrentswillcontinuetoriseasconstructionactivitygathersmomentum;butthepeakinconstructionactivitymayarriveafterthepeakinGDPgrowth,andanoversupplywillresult(Baum,2010,p26).TheAnalysisOutcomesMarketMaturityThe discussions of this section consist of analyzing the generalmovements ofrental value and rental growth over the research timeframe to assess thematurity of regeneration office market in comparison with non-regenerationmarket.Also,withaconsiderationofinflationeffectonrentalvalue,theconceptsofnominalandrealvalueareexplained.Realrentalgrowthforthesetwosetsofdatawascalculatedandanalysed.Twoprimarymeasurementcriteriasuggestedby (Jones andWatkins, 1996) include (1) values rising to apoint atwhich thelong-run price makes private sector development viable and (2) evidenceexhibits a long-run period of sustained letting and re-letting activity. Propertycycles are used to identify their conformity, leads, lags and their respectiveturningpointsovertime(Horn,1993).RentalValueBetween 1988 and 1998 shown in Figure 5, Rental Value of non-regenerationproperties from time to time exceeded the value of regeneration properties.However,after1998,therentalvalueofregenerationpropertiesremainshigherthanthevalueofnon-regenerationones.Theaveragevaluesofnon-regenerationand regeneration office came really close in 1998 at £12.40 and £12.20respectively; thengrew to£14.85and£17.88 in2001;before thedownturnofthelastpropertycyclein2008,theyreachedto£18.88and£24.09in2007.Thismeansthatbetween1998and2007,thegrowthratesofrentalvalue increasedto 52.26% for non-regeneration office market and 97.46% for regenerationmarket,almosttwo-folds.Themovementofbothmarketsseemstoactcontradictorilyfrom1984to2007.Suchasbetween1984and1988,theregenerationmarketremainedflatbutthenon-regeneration one went down and then bounced back. Between 1984 and1998,thecurveofrentalvaluesfornon-regenerationofficemarketseemstobesteeperthanregenerationone,meaninggreaterchangesinvalue.Orin1995,therentalvalueofnon-regenerationmarketwentdowndramatically incontrasttothe steadily upward movement of regeneration market. This phenomenon

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happenedalsoin2001,2003and2006.After2007,bothmarketstendtobehavemoreconsistently.Figure4RentalValueIndex4-starOffice1984-2017

Thismaybeabletobeexplainedbyexaminingthelocationoftheseregenerationoffice buildings. Figure 3 exhibits three regeneration areas that have themostoffice developments located in the current city zones including Central RetailDistrict,CivicQuarterandSpinningfield.Officespaceslocatedinthesecityzonesareclassifiedastheprimemarketwithoneofthehighestrentsinthecitycentre.TakeSpinningfield as anexample; the area isdescribed “oneofEurope’smostsuccessfulurbanregenerationprojects…(anditis)theleadingregionalbusinessquarterintheUK”and“thebiggestcommercialdistrict inthecityandhometosomeofthelargestcorporationsintheNorthWest”(SeeFigure5).Figure5ThecurrentboundaryofRedevelopmentAreaC

Accordingtooneofthecriteriatomeasuremarketmaturitymentionedbefore,rentalvaluesseemtorisetoapointatwhichthe long-runpricemakesprivatesector development viable around 1998. Since then, the value of office rent inregenerationareashassteadilyenjoyedalong-lastingincreaseofthepricethat

0

100

200

300

400

RentalValueIndex4-starofUice

RVaverageR4-star(1984=100) RVaverageNR4-star(1984=100)

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evidently looks favourable toprivate investors.Thegapbetweenbothmarketsgrew wider until 2009 when both sub-markets had a deep dip; however,regeneration office market still outperformed non-regeneration office market.Towards2017,thegapgrewslightlysmaller.Theyearof1998seemstobetheturningpointthatregenerationofficemarketconsistentlyoutperformedthenon-regenerationmarket; itremains likethisupto2017for17years.Thiscertainlyisadesirableoutcometoimpressinvestorsfor injectingtheircapital intheseofficedevelopmentsexpectinga likelyhigherreturnfortheirinvestment,whichmayfurtherstrengthentheirconfidenceinapositive prospect of investing in such a market. Rental evidence suggests arobustdemandfromoccupiersandinvestorswhoarewillingtopayahigherrentfortheofficespaceslocatedintheregenerationareas,whichisoneofthemostsignificantfactorstosustainhealthytransactionactivitiesinrealestatemarket.This supports a sign ofmaturemarket behaviour that rental values grow to apointatwhichthelong-termpricemakesprivatesectordevelopmentviable.ThelevelofrentalvaluehascontinuouslygoneupduringthesethreecyclesbothforRegenerationandNon-Regenerationofficemarket (shown inFigure6).Forthefirstpropertycycles,thegapofrentalvaluebetweenregenerationandnon-regenerationofficemarketisrelativelysmallthenevidentlygrewwidertowardtheendofthesecondcyclearound2000;thedifferencegrewevenwiderduringthethirdcycleandsharplynarroweddownafter2008.Thefluctuationsinrentseemtosubsideforbothmarketssincethen.However,inconsistentmovementsof regenerationmarket in comparisonwith both the non-regenerationmarketand the reference cycles arenoted. For the second cycle, thenon-regenerationmarketstartedatalowerpointin1993;peakedin1997andendedatadimmedfigure to finish the cycle. But regeneration market moved in an oppositedirection to the non-regeneration market from 2001 to 2003 with an up-liftcurveatthesupposeddownturnofthecycle.Theimplicationofthissigncouldbethattheregenerationmarketisnotyetvigorouslystableandlessmature.Figure6Cyclicalchangeofrentalvalue

TransactionsforrentvalueThereisatotalnumberof79buildingsqualifiedinaccordancetothecriteria,31developmentslocatedwithinregenerationareasand48innon-regeneration

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areas(seeTable5)providing569transactionsintotalwitharatio2to3,regenerationtonon-regenerationofficemarket.Table5Numberoftransactionsandbuildings1984-2017Researcharea Totaltransactions NoofbuildingRegeneration4-star 215(37.76%) 31(39.24%)Non-Regeneration4-star 354(62.24%) 48(60.76%)Total 569 79Figure7showsthelocationoftheseofficedevelopmentswiththreeregenerationareas(B,CandD)highlightedinaredlinewhereofficedevelopmentsareconcentrated.Thereare215transactionscollectedfromtheseregenerationbuildings.Figure7Regenerationofficedevelopments

Regeneration Area B, C and D that comprise respectively 10, 13 and 4developments(Table6)accountfor27buildingsoutof31buildingsintotalforregeneration areas. Area B represents the city zone of Central Retail Districtdefined in the 2017 citymap. Two city zones, Civic Quarter and SpinningfieldconstitutetheregenerationareaC;also,theGayVillageandChinatownforAreaD.Table6Numberofbuildinginregenerationareaandcityzone2017Regenerationarea 2017Cityzone ZoneNo TotalNoAreaB CentralRetailDistrict 10 10

AreaC CivicQuarter 8 13Spinningfield 5

AreaD TheGayVillage 3 4Chinatown 1

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Examining the volume of the transactions in rent for the regeneration officespacesforthetimeof1984-2017,thedifferenceofthenumberoftransactionforeachofficebuildingbetweenregenerationandnon-regenerationmarketisslim:31 regeneration buildings to 215 done deals equivalent to 7 deals for eachbuilding comparing to 48 to 354 for non-regeneration ones, which is 7.38transactions foronedevelopment.This exhibits a long-runperiodof sustainedlettingandre-lettingactivity,whichwilldemonstratethecredibilityofthenewoffice developments as an investment and Jones andWatkins (1996) considerthisimpliesacriticalmasswithregardtomarketactivityasthesecondcriterionofmeasuringmarketmaturity.RentalGrowthBetween1985and2017exhibitedinFigure8,thegrowthrateofRegenerationandNon-Regenerationofficemarketsindicatesalotoffluctuationsbutseemstomovetowardsasimilardirection.Before2001and2002,themovementofbothsub-markets shows more volatility than the later period and the Non-regeneration market indicates marginally less stability than the regenerationone. The smaller fluctuations after 2002 for both markets indicate a sign ofmarketstabilizationandmaturity.Figure8RentalGrowth4-starOffice1984-2017

Themovementofrentalgrowthduringthefirstcyclebothwasthemostvolatileamong the three cycles and the last cycle the least (see the Figure 9). Thepossible explanation couldbe themarket gettingmorematureand resilient tothe changes of economic circumstances and market behaviour. Another likelyreason could be more transactions available later on and this efficiency ofmarketinformationincreasestheaccuracyofdataanalysis.

-50.00

0.00

50.00

100.00

RentalGrowth

RGReg4-star RGNR4-star

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Figure9Cyclicalchangeofrentalgrowth

Againboth figure8and figure9demonstratesome inconsistentmovements inrentalgrowthparticularlybetween2001and2007aswellasfrom2013to2016.But the scale of fluctuations seems to be less volatile for the latter period. Ingeneral, the pattern of rental movement is becoming more stable and lessvolatileindicatingastateofmaturemarketbehaviour.NominalandrealvalueWhileproperty rents appear tobe closely correlatedwith inflation in the longrun (2015, Baum, pp. 21), it is helpful to distinguish the difference betweennominal values and real values. Nominal values or figures are the simplemonetaryvaluesatthepricesrulingatthetime.Realfiguresorvaluesarefiguresor values corrected for inflation. Thus, real growth has to deduct the inflationfrom the nominal growth. In order to show howmuch better orworse off aninvestment is, the nominal figuremust be corrected for inflation. The generallevel of prices inmost economies around theworldhas a general tendency torisealmostallthetime,itisimportanttoensurethatpricesarecomparedonalike-for-like basis (2010, Brooks and Tsolacos, pp. 29). In the case of thisresearch, the rise of rental values comprises two elements: it could be partlyattributable to an increase in demand for office space, and partly because ofinflation.Itwouldbeusefultoseparatethetwoeffectsandtobeabletoanswerthe question ‘How much have office rental values risen when the effects ofgeneral inflation are removed?’, or, equivalently, ‘Howmuch are office spacesvaluednowiftheyaremeasuredin1984terms?’.Todothis,thenominalofficerental valuesneed to bedeflated to create a series of real office rental values,whichisthenininflation-adjustedterms.Apricedeflatorseries is required todeflateaseries to theirrealvalues. It isaseriesmeasuringpricelevelsintheeconomy,suchastheConsumerPriceIndex(CPI),RetailPrice Index (RPI)or theGDP implicitpricedeflator that areoften

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used. In this research, the Retail Price Index (RPI) for X year to Y year andConsumer Price Index (CPI) for X year to Y year are employed since they arecommonly used to adjust nominal values for inflation to real values. The realprice series is obtained by taking the nominal series, dividing it by the pricedeflatorindexandmultiplyingby100undertheassumptionthatthedeflatorhasabasevalueof100.Thus,theformulaisinthefollowing:

𝑟𝑒𝑎𝑙 𝑠𝑒𝑟𝑖𝑒𝑠! = 𝑛𝑜𝑟𝑚𝑖𝑛𝑎𝑙 𝑠𝑒𝑟𝑖𝑒𝑠!

𝑑𝑒𝑓𝑙𝑎𝑡𝑜𝑟! × 100

Andhere,toplotintothevariableforthisresearchisRentalValue(RV);then,theformulabecomes

𝑟𝑒𝑎𝑙 𝑅𝑉! = 𝑛𝑜𝑟𝑚𝑖𝑛𝑎𝑙 𝑅𝑉!𝑅𝑃𝐼! 𝑜𝑟 𝐶𝑃𝐼!

× 𝑅𝑃𝐼! 𝑜𝑟 𝐶𝑃𝐼 𝑟𝑒𝑓𝑒𝑟𝑒𝑛𝑐𝑒 𝑦𝑒𝑎𝑟

RealrentalgrowthThe Retail Price Index (RPI) figures provided by Office for National Statistics(ONS) from 1987 to 2017 are used to compute these rental figures with theformulaabove.Forthese30years,therentalvalueofthenon-regenerationofficemarket has grown 63.62%, equivalent to a real increase of 2.12% each year;comparing to 27.69% for the regeneration market, just less than 1% of theannual growth (see Table 7). This indicates that the non-regenerationmarketperformed significantly better than the regeneration market and would beconsideredmorefavourablybyinvestorsintermsoftherealprofitgainthroughreal estate investment. On the contrary, the performance of real growth inregeneration market could look less desirable and unattractive to potentialinvestorsthatthissuggestsitslessmaturenature.Table7NetRentalGrowthminusinflation1987-2017Researcharea Non-Regeneration RegenerationTotalnetgrowth(%) 63.62 27.69EconomicResilienceResilienceandvolatilityEconomic variety might influence regional economic resilience and itsvulnerabilitytoexogenousshockssincearegionwithmorediversifiedeconomicindustriesislesspronetoshocksandmorelikelytorecoverfromthem(SimmieandMartin,2010).TheauthorofthisresearchsharestheviewofBriguglioandcolleagues (2009) on economic vulnerability and resilience; they defineeconomicvulnerabilityastheexposureofaneconomytoexogenousshocks;andeconomicresilienceasthepolicy-inducedabilityofaneconomytowithstandorrecoverfromtheeffectsofsuchshocks.Goodgovernanceisessentialtoprovidean economic mechanism to eliminate or ease adverse shocks caused, forexample,bybusinesscyclestoenhancethelevelofeconomicresiliencetogetherwith strongmacroeconomic stability (Hill et al., 2008; Stevenson et al., 2014).

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Economic vulnerability could constitute a disadvantage to economicdevelopment and resilience by magnifying the element of risk in the growthprocessandincreasedriskcouldadverselyaffecteconomicgrowth(Briguglio,etal.,2009;Cordina,2004).As Zhu (2005) observed, the boom-bust nature of property price fluctuationsplay an important role in business cycles as a result, a resilient and stablepropertymarketincontrastingtoavolatileandvulnerableonecouldbeamajorsource of strength for the global economy, particular, during an economicdownturn. Commercial property market tends to be more responsive tomacroeconomic conditions and it is common to observe that commercialpropertypricescouldhavea sharpdeclineduringaneconomicdownturn.Thefluctuations in property prices can arise not only due to cyclical economicmovements but also the changing perception of the risk premium with thephasesofthecycle.Throughthediscussionsonthenatureofeconomicresilienceabove,thelevelofeconomic vulnerability and stability affects the degree of economic resilienceandmarket stability or in opposite,market volatility. In order tomeasure thelevel of economic resilience related to its volatility and stability in a marketenvironment, the level of the investment risk is a critical evaluation variableusedwidelybytherealestateand financeanalysts.Asaresult, the investmentrisk is employed in this research to assess the level of economic resilience bycalculating the normal distribution standard deviation of Rental Value andRental Growth that reflects the level of investment risk within the definedpropertycyclesexplainedinthenextsection.The involvement of private sector, such as institutional investors intoregenerationdevelopmenthasbeenemphasizedby thegovernmentpolicy(forexample, 2002, ODPM). This is because self-sustained schemes require bothshort-terminvestors,suchas,developmentcompanies,andlong-terminvestors,such as institutional investors. The role of the public sector is to createconfidenceinaregenerationareaasaninvestmentlocationtherebyreducingthelevel of risk to investors. The raising of land values and achievement ofprofitabilityarepositiveinfluencesinachievingself-sustaininginvestment.Portfoliotheoryplaysanimportantroleintheinvestmentmarketthatexplainsthe desire of institutional investors for an investment portfolio that produceshigherreturns,lowindividualassetriskandgreatdiversification.Thistheoryisbased on the assumption that diversification reduces risk (2000, Brown andMatysiak,p249).In practice, this means that strong holding property assets require strongprospective returns, low standard deviation of returns and a low correlationwith equities and gilts. Returns reflect on the level of rental growth. Thisprovides reasoning to analyse the level of investment risk with regard to thesustaining investment from the institutional investors’ perspective thatcontributestoeconomicresilienceofthemarket.

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EconomicResilienceandInvestmentRiskThe data is grouped into different time frame based on the three identifiedbetween 1985 and 2009. The average (mean) rental level of the value andgrowthiscalculatedundereachcycleaswellasthelong-runaverageofthesameperiodcoveringthethreecycleswithextrayearsupto2017.Thenextstepistocalculate thestandarddeviation (Limetal.,2008) for theseperiods toprovideinformation about the volatility or stability ofmarketmovements during eachexamined timeframe.Theassumptionof thenormaldistribution (Jorion,1996;Higgins, 2015) is employed to analyse the results of the standard deviationsderivedfromthedataset.Forinvestment,returnisonesideofthecoin;riskistheother(2015,Baum,p22)and growth reflects the probability of positive or negative return. Investmentprofessionals,suchas institutional investors,whoworkwithapension fundorlife insurance company, use measures of risk based either on the concept ofvolatilityorontheprobabilityofapotential loss.Volatility is thefluctuationofreturnsaroundanaveragereturn(2015,Baum,p23).Forexample,oneproperty(A)mightshowa10percentreturneachyearforfiveyears.Overthefive-yearperiod, it would have shown zero per cent volatility, equivalently standarddeviation(SD)=0,astheactualreturnineachyearwasthesameastheaveragereturn.Ifanotherproperty(B)hasshownapositivereturnof20percentforthefirsttwoyears,followedbyanegativereturnof40percentinthethirdyearandtwofurtheryearsofapositivereturnof25percent,itwouldhaveproducedthesameaveragereturnof10percentperannum.However,thevolatilityinreturnswould have been much great, its SD=28.06. This implies the greater the SDfigure,thehigherrisk.Applying the same rationale of growth reflecting the level of probable return,volatilityalsocouldbemeasuredonthefluctuationofgrowthforayeararoundthe average growth over a certain period. The level of volatility in returns isusuallymeasuredinunitsofstandarddeviation,whichmeansameasureoftheaveragedistanceof eachobservationordata item from themeanof thatdata.For this research, following the same reasoning, the level of rental growth isadoptedinsteadofreturnstomeasurethelevelofvolatility.StandardDeviationandinvestmentriskIt is interestingtoseetheaveragerentalvalueofregenerationofficemarket ishigherthantheonefornon-regenerationofficemarketby£15.95to£14.58(seeTable8),eventhough,theaveragerentofregenerationofficeforthefirstcyclestarted with a lower value at £8.4 than £8.85 of non-regeneration office;however,bothofthesecondandthirdpropertycycleswitnessthehighervaluefor regeneration office rent. But the real growth of regeneration office rentbetween1987and2017onlyhalvestothenon-regenerationmarketsuggestingthegreaterfluctuationsofrentalchangesfortheseofficespacesmeaningabetterpotentialforrentalgrowthwhichalsoisreflectedintheFigure9,showingbiggerwaves in rental growth for non-regeneration office market. Therefore, thisexplains the importance of analyzing the rental value by using different

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evaluationtoolsandconceptstoreallyunderstandandassesshowofficemarketperformsasaninvestmentasset.Table8Theaverage/meanofRentalValuefor4-staroffice

ThestandarddeviationsofRegenerationofficemarket(seeTable9)forthethreecyclesindicatethatNon-Regenerationofficemarketsteadilybecamelessvolatilefrom2.83reducingto2.32andthen1.51;however,thetrendsforRegenerationoffice seem to be different, as the market became more volatile entering thesecond cycle and then improvedduring the third cyclewith the figureof1.42,3.47 and 2.34 respectively. On average, it seems that from 1985 to 2017,Regeneration office market (6.09) is relatively more volatile than Non-Regenerationofficemarket(4.83),suggestinglessresilienceeconomically.Table9ThestandarddeviationofRentalValuefor4-staroffice

CompetitivenessforInvestmentRegionalcomparisonAsattractinginvestmentinpropertyremainsanimportantvehicleforsecuringprivate sector involvement (Adair et al., 2005), in assessing the success of aregeneration policy highlighted by the government (Adair et al., 2002; CLG,2012;DIT,2016)forpromotingsustainableeconomicdevelopment,itissensibleto includethis factor.Newinvestmentmaybringmorebusinesses intothecityand this therefore requiresmorespaceavailablewhich is fit forpurpose tobeconstructedorrefurbished.D’ArcyandKeogh(1997a&1999)definethaturbancompetitiveness refers to the ability of a city to exploit or create comparativeadvantage, and thereby to generate high and sustainable economic growthrelativetoitscompetitors.Consequently, it isusefultocomparethemarketperformanceofManchestertootherregionalcities.BirminghamandGlasgowareselectedduetotheirroleasaregionalcentreanddataavailability.Forthepurposeofthisresearch,thelevelofinvestmentvolumeandthemovementofrentalvalueareexamined.InvestmentVolumeFigure10exhibitstheinvestmentvolumeforthesethreeregionalcitiesbetween2007and2016.Afterthecreditcrunchoccurredin2007,theinvestmentvolumeofManchesterofficemarketsufferedrelativelylongerthantheothertwocities.In 2007, Manchester still attracted more than £700 million to commercialproperty market but did not recover for six years until 2014 with halved

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investmentinflow;unlikeBirmingham,theCity’sinvestmentlevelbouncedbacktothepre-recessionlevelataround£500millionwithintwoyearsin2010;evenGlasgow,thevolumeoftheinvestmentby2010hasgoneback88%ofthe2007level comparing to 52% of the investment capital in the same year forManchester.However,withregardstotheaverageoftotalinvestmentflownintothesecitiesbetween2007and2016,Manchestersecuredthehighestinvestmentvolumeofall to nearly £500million comparing to £400million forBirminghamand justover£200millionforGlasgow,meaningwithinthesetenyears,Manchesterhasreceivedmore total investmentcapital to itscommercialpropertymarket thanBirmingham(25%)andGlasgow(150%).Figure10InvestmentVolume(CnW;PIA,2016)

RentalValueofRegionalCitiesOneofthemeasurementcriteriaforcompetitivenessisthelevelofrentalvalues.Thefollowingchartexplainsthemarketmovementsforthethreeregionalcitiesselected from1981 to2017basedprimarilyon theCBRERegionalOfficeRentIndex(1990-2006)comprisingestimatedrentalvaluesbetween1980and1989basedonthe IPDrentalgrowth.Between2008and2017, thedatasourceusesthesecondhalf-yearCBREmarketreportfor2017.Thedefinitionofrentalvaluein theCBREreport is statedas, “theopenmarketrentalvalueofa rackrentedpropertyofastandardspecificationattherelevantdate”(CBRE,2007).Thereisno indicationofwhethertheserentalvaluesareheadlineoreffective,provableorachievable,andwhatincentivesareassumed.Again,theassumptionmustbethat they are based on headline rental values. Rental growth definition of IPDsaysthattheannualcompoundedincreaseinmonthlyestimatedrentalvaluesisexpressedasapercentageoftherentalvalue.It isunderstandable that theremaybesome inaccuracyof thedatasetsduetousingtheestimatedfiguresandtwodifferentreportseventhoughbothproducedbythesamesource,CBREandtheauthorofthisresearchensuredthattheyareconsistentintermsofrentalvalues.Themainpurposeofexaminingtheserentalfigures is to observe the market movements and economic trends not theaccuracyofeachrentalvalue.

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However,inordertobeasaccurateaspossible,theanalysisisdividedintothreeperiods:1980-1989;1990-2007;2008-2017basedonthedatasource.

1. 1980-1989:asitcanbeseen,therentalvalueofManchesterofficemarketstartedatamuchlowerpointthanBirminghamandGlasgowin1981.Thesimilarrentalgapbetweenthemremaineduntil1989andBirminghamevidentlyoutperformedtheothertwocities.

2. 1990-2007: the 2001 recession seems to affect Birmingham andManchestermarginallysharperthatGlasgowbutsince1992,thelevelofrentalvalueinManchesterhadcaughtupdramaticallywiththeothertwocities. It reached the same level as Glasgow office rent in 1997 andBirminghamin2000butremainedslightlylowerthanBirminghamuntil2008and2009.TheofficemarketinBirminghamtookaheavyhitbythecredit crunch and recovered slowly since then. However, Manchesteroffice market seemed to sail through the financial crisis withoutsignificant loss in the rental value but only with a small but steadygrowth.

In terms of analyzing the office market, the angle has to be focused on theinstitutional investors forseveralreasons. Institutional investorsare importantshareholders in office market. According to the report published by theInvestment Property Forum (IPF) in 2016, offices remain the largest sector ininvestorportfolios, representing44%of their totalholdings in the commercialproperty market. Furthermore, institutional investors were one of the largestoffice holders just second behind overseas investors. They have an influentialroleonthepropertymarket,particularly,primeofficemarket,whichisthefocusofthedatacollectedinthisresearch.

The level of rental value in Manchester office market reached its equivalentstatusastoothertwocities in2000at£24persquarefootandafter2008,theofficerentofManchesterbecamethehighestoneamongthem(seeFigure11).Fromtheinvestor’sprospect,Manchestershowedabetterperformanceinrentalvalue for a long-term period, which indicates the level of market maturity tosecureabetterpositiontocompetewithothercitiesforinvestmentfundswithgreaterconfidencethatManchester ismore likelytodeliverabiggergrowthinrent.Withtheproofofattractingthemostinflowinginvestmentcapitaltoofficemarket, Manchester just demonstrated its greater capacity to compete withothercomponentsintermsofinvestment.Figure11Regionalcitiesrentalvaluecompare1981-2017

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Figure 12 exhibits how these three regional cities performed during propertycycles. For the 1985-1992 cycle,Manchester seemed to react to the downturnmore severely with the greatest dip in the rental value but then behavedconsistentlywithGlasgowforthe1993-2003cycle.Butthenforthelatestcycle,Manchester seemed to be affected the least with no downward correction inrentalvalue,whichcanbeseen forBirminghamandGlasgow.Thissignals thatthecapabilityofManchesterofficemarkettodealwitheconomicshocklikethisbecamebetterandmoreresilient.Anotherpositivesignforstrongereconomicresilienceistolookathowquicklyandwell amarket could bounce back after the downturn of a property cycle.Afteradeepcut in therentaround1992, thespeedof recovery inManchesterofficemarketwasthefastestoneamongthree.Thisalsoappliedtotherecoveryafter the credit crunch; all three cities took an uplift turn around 2012 butManchester demonstrated the strongest growth up to 2015. This indicatesManchesterismorecompetitiveduetoitsadvantageofeconomicresilience.Figure12Cyclicalchangesofrentalvaluesforregionalcities

Conclusions

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Section5presentstheconclusionsofthefindingsderivedfromthequantitativedata analysis categorized under the three measurement indicators of marketsustainabilitywithfivemeasurementvariablescomprisingRentalValues,RentalGrowth, InvestmentVolume, InvestmentRisk-RentalValues,andRentalValue(SeeTable10).Table10MeasurementvariablesandindicatorsMarketsustainabilityindicator Measurementvariable

MarketMaturity • RentalValues(RV)• RentalGrowth(RG)• InvestmentVolume(IV)

EconomicResilience

• InvestmentVolume(IV)• InvestmentRisk-RentalValues(IR-RV)

Competitivenessforinvestment

• InvestmentVolume(IV)• RentalValue(Regionalcities)

The evidence of rental value movement between 1984 and 2017 shows thatregeneration market has become more mature particularly after 1998 withsteadily stable trends. This also applies to the change of rental growth. Eventhough there were some inconsistent movements but only for a relativelyshorter timespan.Within the timeframeof the threepropertycycles, it canbeobserved that the rental value of regeneration properties after 1997 becamemorecloselyalignedwith thatofnon-regenerationproperties indicatingasignofmarketmaturity. Also, the higher level of consistency in the rental value ofregenerationpropertiesshows lessvolatility inpricechangecomparedtonon-regeneration properties. After 1998, the change of rental growth for bothregenerationandnon-regenerationmarketsappearstotrackthegeneralcyclicalmarket movements showing the Manchester office market becoming moremature.The fact of regeneration office rent outperforming strongly for almost twentyyears could attract more investors to invest in regeneration market but thiscould be offset due to the real growth of regeneration market looks lesscompetitive to the non-regeneration one. The lack of sufficient property databetween1987and1997showsthattheofficemarkethasnotreacheditsmaturestate.After1998, there seems tobemore transactionaldata indicatinggreaterdepth of market maturity. The healthy volume of market transactions inregeneration areas suggests the improvement of efficiency in marketinformationaswellassustainablemarketactivities.Thiscouldalsoimprovetheconfidenceoffutureinvestors.Theevidence indicatesregenerationofficemarket is lesseconomicallyresilientdue to the higher possibility of being exposed to greater investment risk. ButManchester office as awhole seems tobe relatively resilient comparing to theothertworegionalcitiesbasedonitsbettercapacityofrecoveringfromacyclicaldownturn.Manchesterofficemarketshowsgreatereconomicresiliencebecauseit recovered quicker during the second and third property cycles. AlsoManchester demonstrated the strongest growth up to 2015. This indicatesManchesterismorecompetitiveduetoitsadvantageofeconomicresilience.

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Looking at the long-termperformance during the targeted period,Manchesterovertook the Birmingham and Glasgow market after 2008 and 2009. ThisexhibitsManchesterbecamemorefavourablewithregardtoexternalinvestmentcompetingtotheothercities.Manchesterprovesitscompetitiveabilitytodrawininvestmentmoneybysecuring£480billionannuallybetween2008and2017withoneofthehighestofficerentamongtheseregionalcities.Regeneration office market in Manchester city centre demonstrates overalleconomic sustainability with assistance of Manchester as a city to be moreresilienteconomicallyandcompetitiveforinvestment.ThelimitationofconstructedpropertydatabaseandindicesApart from the data limitationsmentioned as above, the author acknowledgesthattherewasarangeofuncertaintyattachedtotheout-turnfigureswhichwereatbestvariablesofthesizeandpatternswithinthepropertymarketratherthanrepresentingadefinitivepicture.

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Appendix1TheCoStarBuildingRatingSystem:5-starand4-staroffice

26

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