Manchester is teeming with hotels, cinemas and healthclubs, but can the city’s demand for leisure sustain them? David Thame reports
Leisure clubs
Mancunians are an image-conscious bunch – more money is spent on hairdressers and sunbeds in Manchester than anywhere else in the UK, say industry sources. Walk the streets and you will believe it.
So the spate of healthclubs opening in the city centre should be well received.
Virgin Active signed up last summer for a 1,850m2 (20,000 sq ft) outlet at Morrison-Merlin’s Great Northern Warehouse development, which is due for completion before the summer. Holmes Place recently arrived at Printworks in the city centre, while LA Fitness is pumping iron at Orbit Development’s 55 King Street.
The latest arrival will be David Lloyd Leisure, which has agreed to take a 3,250m2 (35,000 sq ft) unit at Portfolio Holdings’ Piccadilly Exchange – better known as Piccadilly Plaza and noted for its less-than-salubrious bus station and the drinkers that sun themselves in Piccadilly Gardens.
The city council plans to deal with the drunks and brush up the bus station, and observers insist that the location will not disadvantage the booming David Lloyd chain.
Warwick Smither of city-centre surveyor Cheetham & Mortimer says: “I walkedthe town with the David Lloyd team, blagging our way into as many rival clubs as we could. And Piccadilly, located on a transport interchange and on the boundary of both the retail and office districts, will be a tremendous location.”
Smither is confident the David Lloyd brand will ensure that its treadmills and rowing machines are fully occupied from day one.
But leisure industry experts are beginning to air doubts about the sustainability of the city’s healthclub sector.
Jon Nelson, head of leisure at Chesterton, says: “We are nearing saturation in the healthclub market, to the extent that there has been some concern expressed by existing operators. There is only so much trade to go around, even with a growing city-centre population.”
Operators already in the city, such as Living Well and Greens, may have to redouble their marketing efforts. Potential new entrants, meanwhile, are said to be keeping their distance.
Mike Bathurst, partner at Edwards & Co, says: “Like the cinema market, how far can this sector go? We are advising Total healthclubs, and we would not look at the city centre today.”
Even Smither thinks that new entrants should proceed with caution. “If a new entrant arrived now, I would have to say ‘stop’ – unless they knew the market better than everyone else,” he says.
On the other hand, some recent arrivals appear to be doing extremely well – LA Fitness, for example, has made a success of its club in King Street.
Observers believe that the larger facilities, especially those with pools like Holmes Place, ought to be able to hold their own.
Dan Davies at Jones Lang LaSalle says: “The healthclub operators have had a look at the demographics and the figures are right for them. They are all monitoring demand, and I don’t think it’s going to go wrong.”
Cinemas
While the healthclub sector may be riding the wave of success, the cinema sector has now beached.
In March, Kansas-based cinema giant AMC announced it would scale down plans for a 24-screen multiplex at Great Northern Warehouse, cutting out eight screens. The unwanted 3,720m2 (40,000 sq ft) will be sublet as a bowling alley, nightclub or virtual-reality entertainment centre. AMC could face an annual rent of £720,000 if it cannot find a tenant.
AMC estimates that around 2m cinema visits are made each year in central Manchester – insufficient to support its original plans.
The operator’s decision was the third major setback for cinema exhibitors in central Manchester in the past six months: September saw the closure announced of the 4,370m2 (47,100 sq ft) Arena Seven Cinema next to the Manchester Evening News Arena, Victoria, and UGC Salford Quays has already closed, with the 3,100m2 (33,000 sq ft) building up for sale.
Worldwide phenomenon
Stuart Burdon-Bailey, cinema industry expert with property consultant Insignia Richard Ellis and an adviser to AMC, says: “The decision is symptomatic of problems experienced in the cinema exhibition market worldwide. As a scheme, Great Northern Warehouse is very good – it has all the ingredients – but 24 screens, in the current climate, is just too many.”
Rumour has it that Odeon – housed in an ageing building on Oxford Street – is planning to move to the Lloyds metals site on the Salford/Manchester border. But Paul Guyer, partner at Donaldsons and an adviser to Odeon, rejects the rumours.
He says: “There are no plans to move away from Oxford Street. The building may be refurbished at some stage, but with Manchester over-screened and Odeon’s overheads low, more by luck than judgement, Odeon is in a strong position.”
Competition in the cinema sector is becoming intense. More than 60 new cinema screens were due to open in central and south Manchester between September 2000 and December this year.
Hotels
The city is also seeing a frenzy of hotel development. About 2,800 new hotel rooms have been created in the past 12 months or are under construction. And there are plenty more to come, even at the already well-stocked budget end of the market.
Developer Crosby is talking to three operators about a 100- to 120-bed hotel at its Red Bank site, close to Victoria station, while luxury hotel operators Sheraton and Radisson Edwardian have recently signed deals for four-star and five-star operations.
Sheraton plans to create a 250-room outpost at Deansgate as part of the first phase of Allied London’s £500m Spinningfield redevelopment.
Radisson has signed up for another 250 beds in a 16-storey revamp of the historic Free Trade Hall, Peter Street. Meanwhile, Sir Rocco Forte’s RFHotels is pushing on with its five-star Lowry Hotel at Chapel Wharf, Salford.
For developers active across the leisure sector, there could be anxious times ahead. West Midlands-based Richardson Developments need not worry as it has already completed and sold its 32,500m2 (350,000 sq ft) Printworks complex, which includes a 24-screen UCI complex, and a 3,850m2 (41,500 sq ft) Holmes Place healthclub which is due to open soon.
But how confident are Richardson’s rival developers, who are still in the thick of it? Dominic O’Rourke of Morrison-Merlin, creator of the Great Northern Warehouse leisure scheme and Deansgate, and landlord of Virgin Active healthclub, the Hilton Hotel and a 16-screen AMC cinema, is relaxed.
O’Rourke says the axing of eight screens was a “joint” decision with AMC, and a reflection of the European market. On healthclubs and hotels he is defiantly upbeat.
“The healthclub market has legs on it yet. I don’t think it will go the same way as cinemas. And the hotel sector remains very strong. Look at national trends – the big breweries are piling into it in a big way, and Morrisons’ joint venture with Thistle Hotels is going well. The hotel sector is going to stay good for the foreseeable future,” he says.
Everyone hopes he is right.
