After years of setbacks Salford Quays is attracting a range of occupiers – to such an extent that space shortages are now its main problem. Ian Evans reports.
Despite the upbeat mood of agents at Salford Quays, no new office development is planned at the out-of-town location. It seems that just when things are on the up, another spoke breaks in the development wheel.
The early 1990s recession blighted the Quays’ opening. Security provision initially failed to combat local crime. Bad transport links and a lack of parking added to the problems. And then a series of high-profile desertions cast a shadow over the development.
In more recent years, however, these problems have been overcome. The Manchester economy is buoyant, security has been upgraded with continuous patrols and the installation of CCTV, link roads are being put in place for access to nearby motorways, and work has started on the Metrolink extension, to be ready next year. Meanwhile, a 700-space car park is under construction and is expected to open in September.
Work continues on the £127m Lowry Centre, due to open in two years. Orbit Developments, along with site developer Salford Bovis, are also planning to build a 27,870m2 (300,000 sq ft) leisure and retail complex on a 3.2ha (8 acre) site in the Salford Docks. It will be next to the tourist landmark in the Manchester Ship Canal’s former terminal basin, opposite the planned Imperial War Museum of the North. Detailed plans are due to be drawn up at the end of this month – around the same time that Peel Holdings discovers whether or not it is to get the royal yacht Britannia.
Heritage park
Peel is planning an £8m Britannia Village heritage park in the area if it gets the go-ahead from the MOD. Under the plans, the royal yacht would be transferred to a charitable trust and Peel would underwrite the cost. There are no plans to alter the ship, which has now been decommissioned.
But while leisure experiences an upturn and the office market begins to shed what Conrad O’Neill at Canning O’Neill calls its “bargain basement” image, supply is starting to dry up.
Rupert Barron at Chesterton, which is joint agent with Canning O’Neill at Exchange Quay in Salford Quays, says: “Current demand is coming from a variety of sources but mainly from the financial, insurance, banking, telecommunications and computer sectors.
“The expansion of business already in the Quays is an increasing trend. A number of key tenants in all three main schemes – Exchange Quay, Harbour City and The Anchorage – keep a watching brief for released offices adjoining their existing space.”
He adds: “There is growing demand. I think Salford Quays is coming of age.”
O’Neill says that the development aims to mop up up the overspill of unsatisfied demand from south Manchester.
“Supply has stabilised for the moment,” he says. Out of the current total of 47,472m2 (511,000 sq ft), however, some 7,246m2 (78,000 sq ft) is in solicitors’ hands and 17,558m2 (189,000 sq ft) is of low quality, leaving only 22,668m2 (244,000 sq ft) of good- to high-quality space, half of which is in Exchange Quay.”
With the other main office developments – Harbour City and The Anchorage – now fully let, Exchange Quay has a bright future, O’Neill believes.
“The prospects for 1998 are better as Exchange Quay will have on-site parking by September and will be able to re-enter the market seriously from March onwards. When it does, it will have no direct competition, so we expect to see five-year breaks all but disappear and incentives decrease sharply. Headline rents, however, are unlikely to increase until the beginning of 1999 when the Metrolink is in sight.”
Adding to the attractions of Exchange Quay is its improving leisure environment. With restaurants such as Hanrahans, Chiquitos, Fatty Arbuckles and Frankie & Benny’s, choice is now more varied. Construction is also about to start on the 120-bed Holiday Inn Express Hotel on Waterfront 2000, that will complement the Copthorne Hotel.
James Dickinson at Dunlop Heywood says: “Any office occupier’s fears about an immediate environment which does not cater for and provide the right image for the staff and the company alike, have been severely dented over the past year or so, and the Quays area now offers an environment which is second to none.
“People are not just wanting to work in this area, they also wish to live in it, with the existing housing stock being added to by new residential developments.”
But while stressing that Salford Quays is a good place to work, Dickinson also agrees that there is a growing shortage of stock. “It must be said that, with increasing demand, it may not be too long before good-quality accommodation is difficult to identify.”
If clients did locate space, O’Neill puts current Exchange Quay rents at about £135 per m2 (£12.50 per sq ft), compared with £191-£194 per m2 (£17.75-£18 per sq ft) in south Manchester, and around £237 per m2 (£22 per sq ft) for prime city-centre sites such as King Street.
One of the last lettings at The Anchorage went to healthcare firm BUPA last September, a company which was one of the first into the scheme. It took the final 1,010m2 (10,872 sq ft) on the second and third floors of the Gateway Building on a 10-year lease, paying £108 per m2 (£10 per sq ft), with a two-year rent-free period. Forty car parking spaces are included.
BUPA already has 6,968m2 (75,000 sq ft) at The Anchorage, which it shares with firms such as NatWest, BNFL and Prudential.
As well as space at the bigger complexes, such as Exchange Quay, there are also smaller offices and secondary space, says Ian Hall of the Elliott Partnership. His firm and Dunlop Heywood let 1,096m2 (11,800 sq ft) of space at Optimum House, which had stood empty for more than five years. Auto Trader took a 10-year lease at £81 per m2 (£7.50 per sq ft).
Industrial mineral firm Luzenac has taken 186m2 (2,000 sq ft) at Navigation House from Compaq offshoot Tandem Computers. Hall, who represented the landlords, says that Luzenac is paying £108 per m2 (£10 per sq ft) on a five-year lease.
He adds: “Things are getting better at the Quays although it still has an image problem. There’s going to be more housing, roads and the Metrolink going in, so what it needs is more offices.”
David Laws at Knight Frank agrees. “There’s a general consensus of opinion that Salford Quays is a much improved location. There’s still a lot of infrastructure work on roads and the Metrolink which will carry on for the next 18-24 months. But once it’s finished it will give the area a significant advantage.”
However, despite the optimism, there is still little office space in the pipeline. Laws warns: “There is a danger that Salford Quays could lose its momentum if nothing is built. Developers should have faith in the market. There is a real window of opportunity at the moment.”
Such sentiments are echoed by O’Neill, who adds: “We are currently aware of prelet negotiations within Salford Quays. Perhaps if these prove successful it will be the spur to renewed office development activity. Developers can still complete projects in time for the opening of the Metrolink and also capitalise on the lack of opportunities in south Manchester.
“It will be a brave move to start building now, but we are aware of good sites that are about to come to the market, and developers who seize this opportunity should ultimately be rewarded.”
| 1992 | 15,607 |
| 1993 | 16,165 |
| 1994 | 25,455 |
| 1995 | 24,897 |
| 1996 | 16,258 |
| 1997 | 11,891 |
| Source: Chesterton |
| Company | Sector | Location | Size (m2) | Date |
| Royal Liver | Insurance | The Anchorage | 465 | Nov 96 |
| Orange Comms | Telecoms | Exchange Quay | 743 | Dec 96 |
| Global One | Telecoms | Exchange Quay | 1,162 | Jan 97 |
| The Associates | Financial services | Exchange Quay | 2,970 | Feb 97 |
| Inasys | Computing | The Office Village | 371 | Mar 97 |
| Morse Group | Computing | Exchange Quay | 381 | Apr 97 |
| BUPA | Health insurance | The Anchorage | 1,010 | Jul 97 |
| Free Pages | Publishing | Laser | 534 | Jul 97 |
| Mencap | Charity | Optimum | 557 | Sep 97 |
| Venture Factors | Financial services | The Anchorage | 390 | OCt 97 |
| MCS | Advertising | Quay West | 371 | Oct 97 |
| International Water | Utility | Exchange Quay | 975 | Dec 97 |
| Source: Chesterton |
