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North West Commercial Property News - Friday, December 22, 2017

Issue #82

TREAD carefully

North West News

It is easy to forget that the current status of Manchester as a global business centre has been a long and often hard journey that has taken a combination of forceful local government and entrepreneurial spirit.

That is why Greater Manchester Mayor, Andy Burnham, needs to step carefully in his declared objective of radically rewriting the area’s spatial framework. Burnham’s argument is that the plan was not good enough and would bring urban blight and traffic congestion.

For a decade or more, there has been a subtle balance between the aims of the council under Sir Howard Bernstein and the local developers that many thought brought the results the city needed and spread throughout the region.

Burnham appears to be unhappy with the developer-led approach and is switching to a policy with the emphasis on town centres, integrated transport, new cycling infrastructure and possibly increased digital start-up space.

Broadly speaking, the major concern for the property industry in the North West is that too many radical changes to the plans will disrupt new development, particularly of housing.

Changing the plans comes at a time when Manchester has been acclaimed as dynamic business centre, the latest being a survey by Trainline, an independent train ticket retailer that cited Manchester as the second most popular business city after London for SMEs in the UK.

Another positive indicator is the report by Lambert Smith Hampton (LSH) that property investment in the North West in the second quarter totalled £610 million, up 30% on the previous three months and 5% ahead of the same period of 2016.

LSH noted that the leisure and hotel market accounted for around a quarter of the total at £147 million, once again well up on January-March. Top of the pops with an 80% rise was industrial property with such deals as UBS paying £47 million for the Stakehill Industrial Estate.

Ben Roberts of LSH said: “While the resilience of the North West market is welcome news for investors, buyers are having to work much harder to dig out deals and we have seen a significant increase in off-market and selective marketing over the last quarter."

It is important that the government recognises the transport needs of the region and Chancellor of the Exchequer, Philip Hammond, has made an extra £400 million available for the Northern Powerhouse. This is aimed at bringing faster rail services between Liverpool, Manchester, Sheffield, Leeds and York (as well as the East Midlands and London).

TOP OF THE props

North West News

The investment flows across the North West appear to be holding up and are being helped by a shift from the south as investors seek higher yields.

Manchester agent Christopher Dee has bought four properties for the Independent Order of Oddfellows Manchester’s fund, two of which are in Blackburn and Knowsley. The other two are in Edinburgh and London and have a yield of 6.5%.

The unitized property fund (UU(P)IF) provides returns for the Society’s 129 branches as well as central funds and is currently valued at around £65 million.

Chris Jones of Christopher Dee commented: “We have focused on stock that can cope with the inevitable changes in the market that are being properly contemplated by professionals dealing in the sector. With signs that Brexit is now beginning to impact in a negative way in several property sectors, and as occupier demand stalled by uncertainty is no longer a given, it will be quality, well-let stock that will prevail over the next few years."

Oddfellows, a non-profit organisation, is one of the largest and oldest friendly societies in the UK (established in 1810) and has 310,000 members

InBrief #1

North West News

Towngate celebrated the conclusion of their refurbishment of the 7,060 sq metres (76,000 sq ft) warehouse Towngate Business Centre at 1 Everite Road with a launch for industrial agents. The self-contained unit is available to let to a single occupier, providing warehouse space and offices on the modernised estate.

Considerable interest has already been shown in the unit.


North West News

Helical’s Grade II listed Churchgate House has been fully let since being its reception was upgraded to a new look “concierge style” reception with informal meeting areas, coffee shops and event space. Other buildings have done something similar including 55 Spring Gardens and Bridgewater House.

Dan Barnes of Savills said that increasingly landlords are looking at how refurbishments can make their Grade B+ buildings stand out, driving innovation in office design. Tenants seem likely to choose buildings which offer the type of space which allows time away from desks and promotes informal co-working.

Although the market is buoyant, it is important for landlords to consider the impact a reception makes on occupiers’ decisions regarding their moves.


North West News

With global giants such as Amazon seeking office space in Manchester It is easy to see why the city is so successful.

Amazon wants 6,503 sq metres (70,000 sq ft) but it is not the only online retailer seeking large offices because the Hut Group wants to build 13,935 sq metres (150,000 sq ft) at Manchester’s Airport City. Hut is a company backed by former Tesco Chief Executive Sir Terry Leahy and sells online fashion, health and lifestyle products.

These space requirements fit into the new pattern in Manchester in which the high tech sector accounts for 40% of all city centre office enquiries, said Colliers International. The firm’s Peter Gallagher said: “The tech and digital sector now has critical mass in Manchester with more than 140,000 people employed, making it the second city for the tech industry after London."

Chris Mulcahy of JLL highlights the strong office letting market “with nearly 88,255 sq metres (950,000 sq ft) let in the first nine months of the year. We expect the total for the year to be around 111,480 sq metres (1.2 million sq ft)."

Close to half that total came in the third quarter, the highest third quarter since 2010, which belies any thoughts of a slowdown. “We also have five speculative schemes starting this year as well substantial refurbishments,” Mulcahy added. Interestingly, 72% of the lettings were 325 sq metres (3,500 sq ft).

Check point CHORLEY

North West News

Within the region Chorley has gained a reputation as a progressive town that aims to provide a range of business, leisure and residential facilities for its population.

It is also a good location for business with easy access to Manchester, Preston and other parts of the North West. A good example of its attractions is that JLL has let a 3,958 sq metres (42,608 sq ft) industrial building on the Chorley North Business Park for Eric Wright Group to Brysdales, which supplies Railex Filing storage products.

It will now move Railex, which it acquired in 2016, from Southport. Indeed, the expanding Brysdales also owns the adjacent building to its new facility.

Robert Kos of JLL said: “Chorley North is a well-established industrial scheme which has proved popular because of its quality accommodation and links to the rest of the region.” Robert Pinkus were joint agents on the deal.

COUNCIL planning

North West News

Given the tight limits on government funding it makes sense for local authorities to become more entrepreneurial and boost their income through property investment and development.

Many are already doing this although there is always a degree of resistance because of the perceived risks of such a policy.

In the North West, Warrington Borough Council has taken this route and is buying the highly successful Birchwood Park, arguing that it is protecting its frontline services and employment from the worst effects of government spending cuts.

The park, which has 150 businesses and a specialist group of nuclear engineering companies, is owned by Oaktree Capital Management and Patrizia. The money will help hold taxes in check and bring investment to the town centre.

Cllr Russ Bowden said: “Warrington is very much seen as an exemplar of how to go about this type of investment.” The council believes it leads the way in investing its capital and bringing benefits in lower taxes.

Meanwhile, the last warehouse unit at Cavendish Avenue has been let by the park’s manager, Patrizia, to BiSN, a global company in metal-to-metal downhole sealing solutions. The company has moved from two sites in Runcorn and Atherton into the 2,044 sq metres (22,000 sq ft) building which gives BiSN Enterprise Zone status as well as the range of facilities and services within the Cheshire Science Corridor.

Martin O’Rourke of Birchwood Park said: “Cavendish Avenue was built in response to the growing demand from SMEs for bespoke space in the North West. The combination of office and warehouse space in a business park has generated interest and we are pleased now to have a full house."

The success of Birchwood Park is obvious from the fact that more than 6,503 sq metres (70,000 sq ft) of offices was let in the first half of the year, up 45% on the same period of 2016. Impressively, 20 new companies have moved in, including the high profile Ricoh, which added weight to the international flavour of Birchwood.

A key factor for the park is the arrival of high technology companies, notably those specialising in nuclear industry, such as Cavendish Nuclear which has leased 4,380 sq metres (47,149 sq ft) in the refurbished 106 Dalton Avenue.

O’Rourke said: “Last year was extremely successful for us and I am glad to say this has continued in 2017. Despite market uncertainties we have continued to see a high level of demand from businesses looking to set up in the North West, ranging from start-ups and SMEs to global corporations.” Of particular note is the interest from international groups.

O’Rourke noted the strong interest for the remaining space (the occupancy rate is 94%) would mean a successful year and for the future there are 65,030 sq metres (700,000 sq ft) of development land with outline planning permission providing potential for bespoke office or warehouse space.

What is often forgotten about the park is that during the Second World War this was an RAF base leased to the US that handled the arrival of over 11,000 planes from the United States and had a huge population of military personnel, many of them skilled aircraft engineers with the facilities that went with the work.

InBrief #2

North West News

Bob Dyson, one of the best known figures in the Manchester property industry, has joined CBRE as a consultant, bringing 35 years’ experience to the firm. He was involved in many high profile schemes in the city such as the Piccadilly Mayfield regeneration scheme for London & Continental Railways, Transport for Greater Manchester and Manchester City Council as well as numerous city centre office schemes such as Great Bridgewater.

TMT explodes

North West News

Building on its unrivalled history of scientific and technology achievements, such as the first commercial commuter, Manchester is pushing its high tech credential hard.

According to David Laws of Matthews & Goodman, the region’s Technology, Media and Telecommunications sector (TMT) has never been stronger and is having an impact on office design and specification.

While he stresses that the ambitious people in the industry want an attractive office environment which “has to look like a cool bar or hotel lobby than a traditional corporate interior”, functionality is also critical.

In his view much of the region’s existing buildings stock provides ample scope for the essentials require by TMT companies, “thanks to the red brick warehouses and 19th century light industrial units of Liverpool, Manchester, Preston and the towns in between."

Which brings us neatly to the 29 acre site of the University of Manchester’s North Campus, close to Piccadilly railway station, that could be in line for a £1 billion regeneration project. Manchester City Council has asked CBRE to advise on the site, one of the few large remaining undeveloped areas in the city centre.

The area has been earmarked for technology, education and research and development after UMIST relocates to Oxford Road in 2021. Such a large site has the potential for up to 2,500 homes, 139,350 sq metres (1.5 million sq ft) of offices and shops as well as hotels but it must have a research and knowledge-based emphasis to fit the university’s needs as well as the wider perspective in the city.

What UMIST requires is a development partner for the project. CBRE is expected to report on the options by the end of the year. It is likely that high level research will figure prominently in the plans because this is the site of the University of Manchester Institute of Science and Technology.

What makes this doubly important for the city is that it is adjacent to the Mayfield regeneration scheme which is being undertaken by U+I and while the plans are for slightly less housing and offices than the North Campus, the question is whether both schemes fall foul of Mayor Burnham’s new approach.

Judging from the success of the Universal Square Business Centre which is 39% just six months after it was launched by MCR, the office market in the city is in good health.

There are now 35 businesses at the centre, such as Carillion, RMB Solicitors and Marsan Holdings. Chris Taylor of MCR said: “We expect the business centre to be at full occupancy by the end of the year, and plan to roll out the concept across other MCR buildings in the UK."

Part of the management approach is to create a business community among its occupiers.

Astmoor Industrial Estate and Manor Park

North West News

The attractions of Runcorn as a business destination are demonstrated by two letting at Pin Properties’ Astmoor Industrial Estate and Manor Park.

The warehouses, totalling 1,470 sq metres (15,824 sq ft) were let/sold respectively by BE Group, whose Simon Roddam said: “Both of the recent transactions have been with inward investors highlighting the healthy supply of product in Runcorn and the recent road link enhancement provided by the Mersey Gateway Bridge."

Lee Egerton, Asset Manager at Pin Properties, commented that their refurbished warehouses in Runcorn are proving to be an attractive offering.


North West News

A further piece of the jigsaw to regenerate the city centre has come with a joint venture between Henry Boot and Greater Manchester Property Venture Fund (GMPVF) for the Island Site, John Dalton Street.

The attraction of the site, which has Granger House, Old Colony House and Ridgefield is that it is close to Spinningfields and St Peter’s Square, which are at the heart of the city.

Interestingly, this adds to the substantial portfolio of properties that Henry Boot has in the centre, which include the Silk Works, the Courthouse and the Equitable Building.

Cllr Kieran Quinn said: “The development undertaken by GMPVF has the twin aims of generating a commercial return for the fund and supporting the wider economy of the North West. In this way we are able to meet our future pension obligations and invest locally."

Adam Brady of Henry Boot added that: “Our Manchester development business has continued to expand its portfolio and this latest appointment underlines our commitment to the city.

The Island Site is an important regeneration project and has huge potential.”

Salford VISION

North West News

With the vibrant Media City such a success, Salford has stepped up the pace of change.

A clear example is provided by Salford Cultural and Place Partnership (SCPP) appointing AEA to devise a new cultural strategy for the city.

AEA, which undertook a similar commission for Brooklyn in New York, will aim to provide a blue print to bolster the city’s appeal for new business start-ups in the creative and cultural industries.

A host of local organisations make up SCPP from Salford City Council, the University of Salford to the Lowry and Arts Council England. They aim to promote Salford as a national and international centre for culture.

Salford Mayor, Paul Dennett, said: “The contribution of Quays Culture alone to the Greater Manchester economy has been valued at £94.5 million in just one year."

This initiative fits neatly into the pattern in Salford, which has moved ahead of many other local authorities with a 32,701 sq metres (352,000 sq ft) development programme for offices in Manchester city centre in a £200 million programme.

This sets a new benchmark for local authorities, moving ahead of those authorities that buy properties to provide income but also taking on risk. However, Dennett, a former lecturer at Manchester Metropolitan University, believes Salford has to make money to counter the loss of government funding. While it could be hard to imagine anybody in local government saying that austerity has provided pressure for commercial activities, it has happened.

Media City is, of course, an attractive proposition for investors, as seen with Atlas Residential and the Hong Kong-based IP Investment Management paying Peel £55 million for a residential scheme. This is a 238 unit project that will be developed by Peel.

Residential development has certainly taken off in the major cities of the North West. An example is Scarborough and Beijing Construction Engineering Group’s Middlewood Locks with the completion of Phase 1 of the £1 billion project.

This phase is 571 apartments and 929 sq metres (10,000 sq ft) of commercial space.

Ultimately, the 24.5 acre development on the waterside site where Manchester and Salford meet will have 2,215 homes and 83,610 sq metres (900,000 sq ft) of commercial space including hotels, shops, restaurants and a gym grouped around three large basins.

Kevin McCabe of Scarborough commented: “Middlewood Locks is a major undertaking for us, which supports the regional economy with strong job creation and offers much needed homes for the city.” It provides a good example of developing a brownfield site rather than using the precious green areas that surround Salford and Manchester.

InBrief #3

North West News

Workman is the latest occupier of the Universities Superannuation Scheme’s, The Observatory, which has been refurbished. It has a central location in Manchester overlooking St Ann’s Square. Only two floors of the nine storey building remain unlet. Rhys Evans of GVA said: “The refurbishment and the quality of the space, together with the central location have all added to its popularity and recent success.”

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