If Phase One is set to join London to the West Midlands by 2016, Phase Two is expected to take the line onwards to the north of England by 2032-33, splitting into two branches with a western leg going to Manchester Piccadilly via Crewe and Manchester Airport and an eastern leg going to Leeds New Lane via the East Midlands Hub at Toton and Sheffield Meadowhall.

By linking key northern cities, the full HS2 ‘Y’ network, alongside local rail upgrades and plans for the TransNorth east-west rail links, is an important element in bringing together the Northern Powerhouse as a single economic entity.

Manchester

With devolved powers over transport, housing and planning (including public sector land) as well as an agreement to have an elected Mayor from 2017, Manchester looks set to benefit from central Government’s drive to rebalance the economy. Oxford Economics expects Manchester’s economic growth to be above the national average over the next five years.

Strong political leadership and improving local economy is already being reflected in emerging plans for new development. Following a long recession, there are currently 2,500 new homes under construction in central Manchester and Salford, and over 1 million sq ft of new build office space is planned for the city centre over the next two years.

House prices have ticked up 2.8% to an average of £110,000 over the past year and office rents have reached £32 per sq ft in the city centre following an increase in take up to 1.3 million sq ft over the past year.

However, Manchester is only building half of the 9,654 new homes it needs every year and there is still an undersupply of purpose built student accommodation in a city with the UK’s second highest student population.

Demand is expected to grow. With the cost of housing and office rents now at record highs in London, we expect that Manchester’s lower costs will prove to be a draw northwards. We estimate that the cost saving per employee for a company moving or expanding from central London could be almost £10,000 per person a year in office property costs and the same again per person in staff costs.

Development

Plans for HS2 provide additional stimulus to redevelop areas around Manchester Piccadilly station, particularly the sites which missed out on regeneration in the last economic cycle. According to Manchester City Council, the redevelopment around Manchester Piccadilly station has the potential to provide 625,000 square metres of commercial floorspace, 100,000 square metres of retail and leisure facilities and 4,500 new homes.

Figure 8 highlights the different areas around the station. To accommodate HS2, Manchester Piccadilly would be expanded opening up on the north side of the existing station towards Piccadilly Central. To the south, there is much political will to redevelop the government-owned land in Mayfield. Adjacent to that, the University of Manchester North Campus is due to be vacated for wide scale redevelopment.

Such big regeneration schemes undoubtedly benefit from the positive sentiment and political focus stimulated by a project on the scale of HS2. However, given the lengthy timeframe, it is difficult to disentangle how much development will be brought forward directly as a result of HS2 from what would have happened anyway.

^{Source: Manchester City Council}

Leeds

The current plan for the new station in Leeds will be a five-platform station with a pedestrian link to the existing Leeds City station. It provides the catalyst for redevelopment of 136 hectares of land on the south bank comprising areas of Holbeck urban village, the old Tetley Brewery and Leeds Dock according to Leeds City Council.

The site is expected to support 5,000 new homes, approximately a year’s required need in an undersupplied market. The city council has identified that Leeds requires 4,930 new homes a year although only 1,980 were added to existing stock in the year to March 2015.

Leeds is expected to see economic growth over the next five years in line with that of Greater Manchester, above the national average according to Oxford Economics. Providing 250,000 sq m of office space on the redeveloped site will help to provide for this anticipated growth.

London Terminus

Euston station is the proposed terminus for HS2 with an interchange at Old Oak Common. The plans provide scope for redevelopment around the central London station and the creation of a new neighbourhood as part of the major regeneration of Old Oak Common in West London.

In central London, HS2 and accompanying development provide the opportunity to accommodate companies wanting a foothold in London and Birmingham or Manchester or Leeds, in the same way as the Kings Cross regeneration allows Microsoft staff to travel easily between London and Cambridge.

To enable these synergies to develop and to reap the full economic benefits of a high-speed link, it is essential that HS2 terminates in central London. While there may be difficulties to overcome with development around Euston, parallels have been drawn with the regeneration of King’s Cross and St Pancras and there is strong appetite to go beyond the current plans and provide both quality public space and commercial, residential and retail provision.