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Read about the latest news, views and developments in the commercial property world from our industry expert.

POWER changers
WITHDRAWAL symptoms
Hermes DELIVERS
A HELPING hand
InBrief #1
UNIVERSITY Challenged
BACK TO ASICS
Albert DOCKS
Location LOCATION LOCATION
Court CHESTER
dunedin Soap Works

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North West Commercial Property News - Friday, June 29, 2018

Issue #84

POWER changers

North West News

As the commercial property markets settles into a steady - rather than buoyant – phase, the shape of the Manchester-focused Northern Powerhouse is broadening and changing.

With a new minister in charge, John Berry, the powerhouse concept takes a broader sweep to include smaller towns in the north in a shift away from the concentration on the major cities such as Manchester, Liverpool and Leeds.

Berry said: “Northern Powerhouse 2 has to be about more than our great cities, it has to be a whole north approach. Until now Greater Manchester has been the major recipient of government funding for social and infrastructure projects, such as an arts centre and two research institutes”.

The policy brought results with an 84% rise in jobs in Manchester between 1998 and 2015, said the Centre for Cities, even exceeding the figures for London. Berry makes the point that Manchester has been sucking in labour and investment from other towns in Lancashire.

“People living in those areas, they also have their own ambitions for economic expansion”.

As someone who has grown up in the north (he was a lawyer in Liverpool) Berry has a personal interest in the success of the policy.

This will be judged by overcoming some of the problems for the north, notably rail transport, where a faster line over the Pennines is so vital. Apart from anything else, there is a political dimension for a Conservative government needing to win more parliamentary seats.

As far as the Manchester office market is concerned, Mark Canning of Canning O’Neill, said it is “steady but less bullish than last year.

Nevertheless, the national profile of the city is still high”.

While he believes the conversion of offices to residential use has helped the market, it is now in danger of going too far and bringing a shortage of space.

Another future problem, he suggests, is the amount of office space being gobbled up by the new service companies like We Work and he questions the financial sustainability when the rent free periods end on the basis of the prices being paid.

“One really strong market is Warrington”, Canning said, “and in particular Birchwood Park is having a good year”.

Optimism is also reinforced by a survey by the Federation of Small Businesses (FSB) which reported an improvement in confidence among small firms in the North West, even though it remains in negative territory. More than a quarter of the small firms in the region expect their performance will either improve or remain the same but over half said their revenues are stable or increasing.

Simon Edmondson of the North West region of the FSB commented: “It is pleasing to see business confidence returning to the region, and elsewhere across the country. I suspect we are in for a bit of a roller coaster and as such, economic sentiment will wax and wane like this probably until well past Brexit itself”.

WITHDRAWAL symptoms

North West News

Confidence is not being helped by the problems of retailers such as most recently the House of Fraser and Poundworld as well as the closure of branches of the Royal Bank of Scotland.

Indeed, it appears that Greater Manchester will bear the brunt of the closures with 30 of the 162 branch total for the UK, something that is worrying small local businesses.

The FSB’s Robert Downes said: “This fresh round of closures will hurt high streets all over the North West, particularly Greater Manchester, at a time when thousands of small firms are already struggling. When a bank branch goes it means less footfall, less cash in the local economy and less revenue for small firms as a result”.

“This is really disappointing and to see even flagship branches in Manchester city centre being put to the sword in this latest cull shows the bank is not thinking about customers, just its own bottom line. We have had the TSB fiasco and now this”.

The closures also have an effect on the property market in bringing space onto the market but also undermining confidence among agents and developers, particularly as RBS made Manchester one of their top locations for major offices in the UK.

Amid the gloom of shop closures, one large new store is opening with Primark taking 2,973 sq metres (32,000 sq ft) in the Charles Shopping Centre in Burnley.

The deal has been transacted by Addington Capital and EPISO, the shopping centre owner. Alex Wagstaff of Addington said: “This completes an initiative that started two years ago that involved the relocation of Wilko from this unit creating the opportunity to deliver the new Primark”.

“The shopping centre is trading very well and we hope to build on this success by submitting a planning application shortly to reconfigure a retail block in Market Square”.

Hermes DELIVERS

North West News

What has proved of paramount importance for Manchester’s urban renaissance has been the size of major developments, epitomised by the success of Allied London’s Spinningfields which brought quality design to the city.

Now it is the turn of Hermes’ NOMA scheme close to Victoria railway station for the next stage (though there are other major projects to come elsewhere).

Construction has commenced at the Grade II listed Dantzic by Russells Construction which will see it stripped back to provide loft-style workspace designed for creative industries, a fast growing sector in the city. When completed, Dantzic will have 4,181 sq metres (45,000 sq ft) across seven floors.

The building is in an area of real improvement and overlooks Sadler’s Yard, the city’s newest public square and home to the Pilcrow, a hand-built community pub.

The building is adjacent to another key part of the NOMA scheme, the refurbishment of the Federation, a former 6,503 sq metres (70,000 sq ft) former drapery warehouse which is now fully let to the Co-Op Digital, which is creating an open community of digital businesses and innovators on-site.

Another part of the cluster is Hanover, a 8,361 sq metres (90,000 sq ft) listed building which also has aa large area of retailing on the ground floor.

Ian Cody of Hermes said: “This will be a busy year at NOMA with Dantzic starting on site and Hanover nearing completion. The two buildings will provide much-needed office space in the city centre and help underpin our ambitions for NOMA becoming the UK’s leading innovation district. It also underpins our commitment of investing in major mixed-use schemes which benefit from excellent accessibility and great place-making”.

Peter Gallagher of Colliers International said: “Demand for quality office space in Manchester stands at an all-time high but occupiers will want somewhere quirky and unique to base themselves, and period properties like Dantzic are typically very appealing”.

Ken Bishop of JLL added that: “Occupiers looking to move into the city centre from London, the south east and other areas of the North West find buildings with personality highly appealing so we envisage Dantzic will attract strong interest”.

A HELPING hand

North West News

Help Your Claim, the small claims assistant business, has taken more space in 86 Deansgate, Manchester through JLL.

This gives it a total of 2,217 sq metres (23,869 sq ft) in the building which now has only a small amount of vacant space.

JLL’s Richard Wharton said: “As Manchester offices become fully occupied, development will be the key to capturing demand”.

“Our arrested development report showed that Manchester has a Grade A vacancy rate of 1.9%, although it also showed how developers were reacting to this with 60,710 sq metres (653,500 sq ft) of speculative Grade A space set to be completed by 2020. More than half of that will consist of new build developments”.

One way of judging the economic strength of a city is the number of companies expanding their space or moving in from elsewhere - something that particularly applies to Manchester.

A good example is provided by CBRE which is increasing the amount of space it occupies by 30% to cope with continued expansion. Its current work force is 130.

It has taken 1,051 sq metres (11,309 sq ft) on the tenth floor of the landmark One St Peter’s Square with an eye to having sufficient space for future expansion.

Oliver Thomas of CBRE commented: “The office overlooks the Midland Hotel, Manchester Central Library and the Town Hall. The staff working areas have been arranged into strategic neighbourhoods where teams are encouraged to share space and resources, collaborate and ultimately be more productive”.

“There has been a significant investment into staff breakout and informal meeting space”.

John Ogden of CBRE added that: “It has been another exceptional year for our North West business exceeding all aspirations”.

InBrief #1

North West News

A report by Nespick on the cost of relocating businesses throughout the world, places Manchester in 18th spot while London is in 5th place.

Omer Kucukidere of Nestpick said: “In the past few years we’ve seen trends that more people than ever are relocating to far-flung destinations which have been rapidly digitalized. It is now equally as possible to find 4G on a beach as in the centre of a city”.

UNIVERSITY Challenged

North West News

An example of the wider social aspect of new development is provided by the £1 billion Middlewood Locks scheme in Manchester where the developers have partnered with the University of Salford in a design competition to provide artwork for the communal areas of its new apartment building.

The design approach is the focus of the brief to students at the university with a quest to create a series of large scale artworks with a linked theme in the lobbies of the six phase one buildings housing 571 apartments.

Nicola Wallis of the developer, Scarborough, said “The residents’ communal areas have been designed in a way to encourage our customers to socialise”. The point here is that Middlewood Locks is a major mixeduse development with a range of commercial space in offices, shops, bars and restaurants.

It is also important for Salford and the Mayor, Paul Dennet, said: “Salford is fast becoming an exciting centre for creative industries and I am delighted to see our developer community now connecting and collaborating with the artistic talent at the university”.

Middlewood Locks is the largest regeneration project in Greater Manchester and one of the largest in the UK and is a partnership of Scarborough, Metro Holdings (Singapore) and Hualing Group of China.

BACK TO ASICS

North West News

Another deal in Warrington has seen BE Group, on behalf of Plus Dane Housing, let 1,005 sq metres (10,817 sq ft) to the sport brand ASICS at Clearwater, Lingley Park.

Simon Roddem of BE Group said: “ASICS is a household name and therefore an attractive tenancy for any business park in the North West.

Image and location played a large part in their search for a new office”.

“The Warrington office market produced 4,645 sq metres (50,000 sq ft) of transactions in the first quarter of 2018, a good start to the year. The vast majority of transactions were Warrington occupiers relocating and expanding in the borough, which is a strong characteristic of this market”.

Lingley Mere is the long-established headquarter office park of United Utilities, and also incorporates a modern office scheme known as Clearwater with 5 self-contained office buildings totalling 6,735 sq metres (72,500 sq ft).

Apart from the success of Manchester city centre, Warrington has been buoyant for some time now and attracted new business as well as the expansion of current occupiers.

Caddick Construction is an example of a northern company that has expanded healthily in the past decade and is now relocating its North West office into Trident Business Park, Warrington from Olympic Park.

This follows an expansion in the workforce and a number of new contracts in the region where it now has 14 contracts valued at £56 million.

Ian Threadgold of Caddick said: “The last three years have been a huge success for us in the region. We’ve won contracts for high profile projects such as Liverpool Shopping Park, Q110 in Crewe and the Great Home Street scheme in Liverpool”.

Albert DOCKS

North West News

What is impressive about the regeneration of the docks area of Liverpool is the steady stream of new occupiers that are moving in as well as the steady flow of investment.

This is encapsulated by Aberdeen Standard Investments agreeing five new leases at the iconic Albert Dock as part of its vision for the complex, including a diverse mix of independent and national leisure, retail, restaurant and office tenants.

The policy is to reposition the commercial aspect of the dock by bringing in new occupiers. Aberdeen also said there is a “re-engagement with the city and wider region with an eclectic offering of retail, restaurants and leisure under pinning the long-term vision”.

Aberdeen is also set to embark on a refurbishment programme of the vacant office space and mezzanine level of the dock in order to attract a diverse range of occupiers, including start-ups seeking more flexible terms.

Chris Wright of Aberdeen said: “Albert Dock is a world-class tourist attraction bringing a significant amount of footfall to our tenants but we are striving to create a year-round destination within the city that locals visit regularly and feel compelled to return to. We are starting to see strong demand emerge from exciting, progressive and emerging operators, either expanding within the North West or from further afield”.

There has been a whole host of new leases signed at Liverpool Waters, such as the luxury vehicle insurance broker, Novo, which has been based at Princes Dock for some years.

More significantly the chartered financial planners, Willson Grange, has relocated to Liverpool Waters from Hoylake and leased 975 sq metres (10,500 sq ft) at 12 Princes Dock.

Liza Marco of Liverpool Waters said: “Businesses are seeing the advantage of being located in the city centre and the benefits it brings in terms of welcoming new clients and employees. As we enter our next phase of development, we’re looking forward to many more organisations joining us at Liverpool’s water front”.

Another recent new arrival at Princes Dock is the quantity surveying and project management business, Walker Sime.

Location LOCATION LOCATION

North West News

Intense lobbying by regional cities to attract Channel 4 in its relocation out of London is underpinned by the boost given to Greater Manchester when the BBC opened in Salford.

The Investor Square organisation expects a significant boost to the property market if Manchester is chosen, particularly the buy-to-let market.

Ross Kelly, funder of Investor Square, commented: “Manchester is one of the hot favourites to become host to C4’s new HQ which will see at least 300 of the station’s staff and their families relocating to the chosen city. Manchester is already experiencing a 7.53% rental price growth as the city booms in confidence. Channel 4 is going to be extremely tempted by the pool of talent and facilities already available in Media City”.

Elsewhere, in Cheshire, the hotel business continues to thrive and there is a special place for large country house premises, such as Rowton Hall & Spa which has been sold through Christie & Co for £6.25 million.

The 40-bedroom hotel is situated in the core wealthy part of Cheshire Location LOCATION LOCATION close to the Roman city of Chester and has function and conference facilities which accommodate a large number of weddings each year.

It has been bought by Anderbury, who own other hotels in the region.

Rowton Hall offers the opportunity to increase the number of bedrooms in the complex.

Ryan Lynn of Christie said: “We have achieved a strong result for the Wigginton family in the sale of the hotel on a very confidential basis”.

Court CHESTER

North West News

There has been a noticeable increase in activity in the commercial property market of Cheshire in the past year with Warrington and Birchwood Park standing out.

Other parts of the county have also seen activity, as shown by JLL being appointed to manage the Winsford Cross Shopping Centre which has been recently acquired by Cheshire West and Chester Council (yet another example of the trend of local government purchasing shopping centres).

The council bought the 20,446 sq metres (220,000 sq ft) centre to help unlock the potential for a comprehensive development of the town centre.

Jordan Jeffery of JLL said: “Winsford is set to go through some exciting changes over the next few years, with inward investment from many different sectors supporting its regeneration”.

At the former Hooton Park Airfield, Ellesmere Port, a 4,754 sq metres (51,173 sq ft) aircraft hangar built in 1940 and used to service RAF aircraft, is on the market through Fisher Gorman whose Julian Mellis said: “It has excellent storage space suitable for a range of uses, subject to planning”.

Hooton Park is adjacent to the Vauxhall car plant, and is in a convenient location close to the M53.

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