The recent news of Bruntwood’s transformation into a joint venture has sent shockwaves through the Northern property market. Dubbed ‘Project Quantum,’ this move marks a significant shift in the landscape of Northern real estate, leaving many wondering what the future holds.

Gone are the days of Bruntwood as we know it. The company’s impressive portfolio of city center assets in Manchester, Leeds, Liverpool, and Birmingham will now be consolidated under the new SciTech business. This transformation comes as a response to the changing needs of innovation-led businesses post-pandemic, as Bruntwood chief executive, Chris Oglesby, explains.

But what does this mean for the Northern property market? The answer lies in the quantum nature of this change. Like the principles of quantum mechanics, Bruntwood’s presence is simultaneously here and not here. While the company may no longer be the majority controlling party in the joint venture, it still exists in a new form, ready to embrace the challenges and opportunities that lie ahead.

So, what are the key facts? A £500 million equity fund raising has enabled the Greater Manchester Pension Fund (GMPF) to join forces with Bruntwood and Legal & General in this ambitious venture. The shared assets, including the highly anticipated ID Manchester development, will be managed by the existing Bruntwood/L&G vehicle, with Bruntwood actively looking to grow its portfolio and ignite new opportunities within its suburban office spaces.

The implications of this transformation extend beyond Bruntwood. A recent study by Bayes Business School reveals a decline in new loans for Northern properties, with a 22% drop in volume year-on-year. The default rate is rising, and many borrowers are struggling to accommodate further debt due to interest coverage requirements. Refinancing £178 billion of property debt within the next three years is a daunting task that will undoubtedly impact the market.

Furthermore, Schroder Real Estate Investment Trust’s results to October are eagerly awaited. The company’s heavy investment in Northern offices in parallel with Bruntwood’s expansion presents an interesting comparison. While Schroder’s portfolio has suffered a decrease in net asset value, their weighting towards industrials and real estate in the South of England provides some resiliency that Bruntwood may not have enjoyed.

The rise of London-based corporate landlords in the Northern property market is another factor to consider. As they increasingly dominate the scene, their relationship with the North is purely transactional, devoid of the local connections that were Bruntwood’s strength. The COVID-19 pandemic has only accelerated this shift, making the joint venture with GMPF and Legal & General a true “sliding doors” moment for Bruntwood and the Northern property market.

Despite these changes, the new Bruntwood is far from valueless. With a retained portfolio worth an estimated £360 million, the company plans to redevelop assets within its suburban office spaces, acquire more workspaces, and expand town center partnerships to other locations. The show goes on, and Bruntwood is determined to embrace the future.

In conclusion, the birth of quantum real estate marks a turning point for Northern real estate. Bruntwood’s transformation into a joint venture opens doors to new possibilities and challenges. While the company’s identity may have shifted, its impact on the market is undeniable. The Northern property market must adapt to this new reality, navigate the hurdles of refinancing, and discover what lies beyond the quantum horizon.