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North West Commercial Property News - Wednesday, February 19, 2020

Issue #87

NORTHERN towerhouse

Confidence breeds confidence and this surely has to be the motto that applies currently to Manchester where the performance of the commercial property market has been so strong for years.

Here is a city that has shifted its global standing in a significant way through its own efforts, helped by the publicity it generates with its two foreign-owned football teams and string of successful musicians. The added ingredient is a supportive city council now led by an elected mayor, Andy Burnham.

While the debate about the Northern Powerhouse rolls on, history tells us that Manchester will not put up with second best and will pressurise the national government to implement the transport plans, whatever the London elite thinks - because it is noticeable how the plans have the support of the north but are belittled by London- based newspaper columnists.

The confidence is being translated into the high level of office lettings in the city centre and plans for new development, led by NOMA on a 20 acre site adjacent to Victoria station.

MEPC, the development manager for the scheme, has submitted plans for the first speculative offices in a 18,580 sq metres (200,000 sq ft) project at 4 Angel Square which will include new areas of public realm and retail space.

Paul Pavia of MEPC said: “Major corporations from not just the UK, but across the globe are looking to base some of their operations in Manchester, thanks to the city’s strong civic leadership, thriving culture and leisure scene and increasing transport and digital connectivity."

NOMA’s efforts will go a long way to overcoming the shortage of Grade A offices in the city as they have plans for a total of 232,250 sq metres (2.5 million sq ft) as well as housing, retail and public realm. Amazon has already signed up for space in Hanover, one of the refurbished properties, for its first office outside London.

NOMA has also completed the refurbishment of the 4,181 sq metres (45,000 sq ft) Dantzic building, two months ahead of schedule.

Stephen Bradley of Hermes Investment Management, the investment manager of NOMA, said: “We have invested significantly in the listed estate at NOMA, helping to preserve Manchester’s built heritage for future generations while ensuring that the buildings are suitable for the workforce of today. It has loft-style office space that has proven popular in cities worldwide and we anticipate strong interest in Dantzic."

Peter Gallagher of Colliers International added that “We are seeing a huge appetite for re-purposed historic buildings, such as Redfern (NOMA), that offer a seductive blend of authenticity with the very best of modern facilities.”

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MAKING hay

In its latest construction industry analysis, Barbour ABI notes that the north-west had the largest share of UK industrial contracts in May at 20.4%.

The largest contracts in the region were a £27 million deal for four industrial units at Haydock Business Park, followed by a £20 million deal for a logistics facility at Hillhouse Business Park, Blackburn.

Overall, the value of contracts in the three months to May was £1.8 billion, an increase of 26.4% on the previous quarter.

Brief: Manchester is in third spot in a list by Lambert Smith Hampton (LSH) of the cities with the best prospects for economic growth, behind leaders Edinburgh and second placed Cambridge. LSH said: “As one of the fastest growing locations (Manchester), the city has shown a robust GVA growth in the UK as well as being one of the most entrepreneurial cities of the year.”

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STYLE Council

What really underlines the growing status of Manchester is indicated by last year’s office take-up of 162,575 sq metres (1.75 million sq ft), an increase of 44% on the previous year.

To add to this, the city pulled in the highest investment volume of any regional city at £989 million, an 8% rise on 2017. In fact, all the major regional cities performed strongly last year, reports Savoy Stewart based on reports by Knight Frank.

Darren Best of Savoy Stewart said: “On the face of it, take-up and investment volumes in different cities outside of London indicate a strong and promising outlook for the office market."

JLL makes the point that job creation in Manchester is outpacing other regional centres and is providing a major boost to the city’s property markets. The projected increase by JLL is 10,000 office workers added between 2018 and 2012.

Elaine Rossall of JLL commented: “When thinking of the UK’s strongest property markets, Manchester continues to be in a league of its own.

Job creation is at record levels and is spread across a range of sectors.

Commercial development is increasingly catering to occupier demand."

The quarterly analysis by the Greater Manchester Chamber of Commerce reported that “long-term confidence is still strong.” The key findings are: * International sales by both manufacturers and the services sector have increased; * Consumer spending has risen slightly and there has been an increase in advanced orders: * The construction sector continues to perform well despite some city centre projects coming to an end and it will be boosted by upcoming infrastructure projects;

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TAKE off

A vital component of the success of the region is the fast-growing Manchester Airport which has completed the first phase of its £1 billion transformation plan.

The 216 metre long new pier is finished and connects to a new pier, with 11 jetty served contact stands, to Terminal 2. As part of the improvement, the apron was extended by 49,000 sq metres to accommodate new aircraft parking stands.

Andrew Cowan of Manchester Airport said: “Over the coming years we will transform the airport for our customers, giving the north the world-class airport it deserves. The investment we are making and the range of destinations we connect to, in all corners of the world, underlines the vital role the airport plays in creating jobs and driving growth across the north of England.”

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NOMA HEROES

The timing of the development of the NOMA area appears to be perfect as the market booms and the scheme attracts Amazon to occupy the Hanover in the 20 acre scheme.

This is Amazon’s first hub outside London and it is a key letting in the 232,258 sq metres (2.5 million sq ft) complex, where Hermes is the investment manager. The prestigious Brookings Institution calls NOMA an innovation district because of the blend of different uses, heritage buildings and transport links.

Chris Taylor of Hermes said: “Our ambition has always been to attract world-leading occupiers to Manchester by creating a sense of place and shaping one of the UK’s first innovation districts.” NOMA is one of the birthplaces of the industrial revolution, being the site of Sir Richard Arkwright’s first steam powered cotton mill.

Indeed, NOMA is picking up speed and now plans a 18,580 sq metres (200,000 sq ft) office building at 4 Angel Square, on the corner of Corporation Street and Miller Street, its first speculative new office building in the project.

Among the buildings being refurbished is the 4,645 sq metres (50,000 sq ft) iconic Dutch modernist building, the Redfern. Richmal Wigglesworth of architects Sheppard Robson said: “Redfern is our third listed building on the estate and is an important part of the NOMA jigsaw, fusing office space and staff amenities with Sadler’s Yard, the neighbouring public space."

Close by, the Old Bank Residency has been opened for creative practices.

Peter Gallagher of Colliers International said: “We are seeing a huge appetite for re-purposed historic buildings, such as Redfern, that offer a seductive blend of authenticity with the very best of modern facilities.”

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Pace MAKERS

Significantly, the new developments at St Peter’s Square have continued the success of Spinningfields in providing Manchester with top quality offices.

CBRE and Cushman & Wakefield, acting for Moseley Street Ventures, have leased the 6th floor at 2 St Peter’s Square to Knights PLC, a legal and professional services company leaving only the 11th floor vacant.

The overall development has gained momentum from the fact that Manchester City Council invested £185 million in it.

Jonathan Cook of CBRE said: “The Square is a major gateway and transport hub.”

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SPACED out

Proof of the dynamic growth of the serviced office sector is that CBRE has acted for Spaces in leasing the 11,148 sq metres (120,000 sq ft) 125 Deansgate.

Spaces will open there in early 2020, adding to its existing office at Peter House, Oxford Street. The office on Deansgate, which is Grade A, is close to Spinningfields, Selfridges and the Arndale Centre and also has easy access to the Metrolink and railway stations.

Jonathan Cook of CBRE said: “The property offers some of the highest quality accommodation in the city and the latest acquisition by Spaces illustrates the growing demand for flexible workspace here."

Elaine Rossall of JLL said: “Manchester is presently the most mature of the regional cities. Not only was it the first location outside of London to secure WeWork, but over the last five years flex space has increased in the city by just under 350% compared with 210% for London."

Renaissance With the largest office letting of the year of 2,414 sq metres (25,982 sq ft) to the Park Group at Canmoor’s 20 Chapel Street, Liverpool continues its steady commercial renaissance.

The Birkenhead-based company, which will retain its facility at Valley Road Industrial Estate, has been advised by Glenbrook. Park Group’s Ian O’Doherty said: “The relocation of our core business to Liverpool is an important and tangible step towards us delivering the new strategic plan."

Canmoor’s Sam Walker emphasised that the largest office deal this year showed “the appetite for high-quality office accommodation which makes the property 90% cent full."

Another newly refurbished office building at One Temple Square, Liverpool has come onto the market through CBRE and Worthington Owen. The Grade II property has been refurbished by Glenbrook and already has a range of occupiers.

Andrew Byrne of CBRE commented: “One Temple Square is an iconic building in one of the most attractive areas of Liverpool’s business district."

Like other parts of the region, industrials are top of the commercial property sectors in terms of development and demand as illustrated by Network Space’s scheme at Mere Grange, St Helens where the second phase is nearing completion.

The 4,775 sq metres (51,400 sq ft) unit is pre-let to a laundry firm, Synergy LMS, on a 25 year lease (unusually long for this time). One of the completed first phase units has been let with four remaining.

Network Space clearly has the ambition to complete the scheme and has planning permission for the final phase of 1,858 sq metres (20,000 sq ft) with completion expected before the end of the year.

Stephen Barnes of Network Space said of the fact that 60% has been let that “this is not only testament to the quality of the accommodation but also the location and our proactive approach."

The development is being developed with Homes England, St Helens Council and Liverpool City Region Combined Regional Authority.

Knowsley is one of the most popular locations in Merseyside for industrial development and here Network Space has completed Element, the second phase of the 9,615 sq metres (103,500 sq ft) speculative Alchemy Business Park.

Barnes said: “This is our fourth self-financed scheme to complete within 12 months, taking the total space to just under 37,160 sq metres.