Devolution and digital changing the face of the commercial real estate market

Manchester City Scope

John Carter, Commercial Director at Aldermore Bank, picks out the details on why we’re seeing businesses move out of London, and into new thriving areas.


It’s an exciting time to be a small business owner in the UK, as the nation’s economy is becoming far less London-centric, thriving entrepreneurial which has seen hubs developing across the country.


Devolution initiatives such as the Northern Powerhouse and the Midlands Engine have given investors the confidence to look to Birmingham, Liverpool and Manchester, while infrastructure projects such as HS2 lay the groundwork for economic regeneration. Companies have taken note, and office relocations from London into the regions by large organisations such as Channel 4 have encouraged competition and renovation.


Specialist and tailored solutions


We’re a specialist lender built around our customers and brokers, providing competitive straightforward products. We lend to both landlords and SME business owners and our sector specialists have a unique insight into the challenges and opportunities facing both types of borrower.


Indeed, our Future Attitudes research, found that many smaller businesses miss out on golden opportunities because they’re unable to get the necessary cash together in time. Nearly a quarter of SMEs have had to forgo opportunities worth an average £79,000 a year because of funding problems. We don’t want this to happen to our own customers, which is why we work so hard to respond quickly and take a rounded view on our customers’ finances.


To show our commitment to the commercial property market, we’ve increased our aggregate lending cap to £25 million, providing our borrowers with much more scope to expand their horizons.

We’ve also launched a range of seven-year fixed rates in response to demand from borrowers and brokers too. We regularly work very closely between sales and underwriting  teams to structure unique deals for those with individual circumstances. This human underwriting, combined with speed, is what our customers value.


That’s why our bespoke expert-led approach to supporting SMEs is not simply a nice-to-have, but a need designed to meet the very different operational requirements and local market conditions of our customers, wherever they are in the UK.


This outlook helps borrowers take a matter-of-fact view on the risks our customers are likely to encounter, and create solutions that give them full credit for their business acumen as well as the true value of the assets across their portfolio.


For investors that are confident in the UK commercial property market there are opportunities around the country.  If we look at cities like Manchester, Edinburgh and Birmingham there’s good demand, growing employment and a growing need for varying asset classes – not just residential, but commercial, manufacturing, engineering, retail distribution and student accommodation.


The retail market remains challenging as big high street brands lacking a viable online proposition come under pressure from digital disruptors such as Amazon and ASOS, but we are seeing growing demand for warehouses and distribution hubs to support this changing consumer dynamic.

In terms of other asset classes that look interesting, the student rentals sector remains buoyant. For those seeking stable long-term returns, hotels and care home investments continue to be attractive as these tenants tend to look for longer-term leases.


Investment diversity


As a lender, we are increasingly seeing investors seriously considering the ‘mixed use’ market to diversify away from traditional buy-to-let investments.  Semi-commercial properties have a number of advantages,  a degree of rental income certainty and, if the asset is in a good residential letting location, the benefit of good rental income from the ‘living quarters’, which makes the asset attractive from an investment return perspective.


We see this type of investment diversity as a strength, and want to support landlords by taking a view on the balance of risks across the whole range of properties they own rather than adopting a restrictive approach that looks only at each one in isolation.


As successful small and medium sized enterprises grow in strength and size, they’re typically in need of new premises to operate from. Each of these commercial premises will have different operating considerations, requiring the business and their funding partner to have a comprehensive understanding of what the company needs in the short, medium and long term.


It’s encouraging that thanks to specialist banks, such as Aldermore, much-needed funding is finally filtering through to those smaller businesses across the UK that are the lifeblood of the economy.

Find out more about Aldermore’s Commercial Mortgages and Development Finance offerings at



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