Regeneration delayed: Bryant Homes walked away from New Islington earlier this month. Nadia Elghamry asks if the project can now be saved
The green shoots of delivery at east Manchester’s The Botanic have been caught by an unseasonal touch of frost. Bryant Homes had been sowing the seeds to deliver 200 flats across two blocks as part of the New Islington neighbourhood in Ancoats. But this month it walked away from the project.
The news has dealt a bitter blow to east Manchester and, more specifically, to the Urban Splash-led 29-acre New Islington project, which is one of only seven projects in English Partnerships’ Millennium Communities programme.
David Chiltern, North West area director for the Homes and Communities Agency, remains sanguine. “This will cause a delay to this part of the project, but this is happening on construction sites up and down the country,” he says.
Yet this is not a case of one builder stalling in east Manchester. Cibitas Investments has lengthened the timeline for its massive 95-acre regeneration of Holt Town Waterfront. Further afield, Ask Developments has put work on hold at its £42m St Petersfield scheme in Ashton-under-Lyne, and the woes surrounding redevelopment of the supercasino site next to Manchester City’s Eastlands stadium are well publicised.
Now, as the economy worsens, Eddie Smith, interim chief executive of urban regeneration company New East Manchester, is having to work hard to hold the threads of regeneration together.
“It’s been an interesting 12 months and one of the most challenging times in the short history of NEM,” admits Smith. Limited public money will be used to complete phases of any projects that are under way, but Smith says: “We will not be using public funding to underpin the next phase of development.”
Despite the gloom, Smith is keen to list positives, such as the works under way on the Metrolink and the takeover of Manchester City Football Club by Abu Dhabi United Group for Development & Investment. Although coy about details, he says that NEM has been working with the club on a five-year business plan, which will be published in May.
Leisure development
Smith says that investment in the football club should mean investment in east Manchester, but he categorically denies that the club’s owners are involved in negotiations for the former supercasino site.
Here, plans include a “destination leisure development”, which will move to preferred bidder status in the autumn. Timing remains the big question, however.
Some believe that the project is set to fester until the end of the recession. “How are you going to ensure deliverability?” asks Stuart Burdon-Bailey, head of retail and leisure at Jones Lang LaSalle’s Manchester office. “You can bring forward many glossy brochures, spend money on the design, take it to planning application but then just tread water. While schemes are dependent on a number of things, such as development finance and stronger yields, they are all underpinned by occupier demand, and if you ain’t got an occupier then you ain’t got a scheme.”
The former supercasino site is challenging, says Burdon-Bailey, adding: “I can’t see a traditional commercial leisure scheme there.”
The city is already overscreened as regards cinemas, and sports facilities, such as the velodrome and the football academy, have already been developed. Burdon-Bailey adds that the health and fitness market is all about retention rather than expansion, and bowling and ice-skating need another occupier to anchor a scheme.
NEM is in discussions with a sole bidder, which Smith says is a “major player, but not a local player”.
He admits, however, that the residential market is “as flat as a pancake”. This leaves NEM with a headache at The Botanic.
Smith says the site will now come back into its ownership. Having already spent £25m on the scheme, he adds: “We will put it back out to the market when we believe it is ready to absorb the scheme.”
The timing is questionable, since other developers have pulled back plans. For example, Citibas’s initial plan at Holt Town Waterfront had been to release two plots – totalling almost 3 acres – to the market when planning consent was granted last year. But development executive Sally Cockshaw says: “We have put them back in the pot. We’ve been prudent, made no unnecessary expenditure and battened down the hatches.”
Instead, the developer is concentrating on the finer details of groundwork. When the first development plots come to the market, the project may not look quite the same as it does today.
“We are reflecting on what the demand will be. There is an oversupply of one- and two-bed properties, and if the scheme had been about those then we would be radically redesigning it,” says Cockshaw.
There are signs that those that have gone down this route are rethinking their sales strategies. In 2007, Urban Splash claimed that it was charging a 15% premium for Chips, its 142-unit residential scheme in New Islington. The developer is keeping tight- lipped, but has recently started to make parts of its 215-flat Budenberg HAUS Projekte in Altrincham available to let, rather than for sale. It is even giving away one month rent-free.
That will do little to encourage others to take on a whole scheme from scratch. As such, it may yet be many years before a new developer sprouts up at The Botanic.
Ashton-under-Lyne project on hold
Plans at Ask Developments’ St Petersfield development in Ashton-under-Lyne remain on hold, as negotiations for funding are proving tough.
The Manchester developer, in partnership with Tameside council, the North West Regional Development Agency and English Partnerships, had planned to deliver a 400,000 sq ft, £42m business quarter in the town centre.
Around 94,000 sq ft of office space has already been delivered over the past four years, including a first phase of 55,000 sq ft bought by Prestigic Buildings in 2006, of which 13,000 sq ft remains available.
Planning permission for phase two, an 86,300 sq ft building, was granted in February last year, but since then things have got tougher.
“Discussions with banking partners have proved difficult,” says Ask’s development director, John Hughes. “We pulled our horns in. It is nothing to do with our business concept. I’d be impressed if anyone said they were doing speculative development in the regional office market.”
He adds: “When there is a chink of light we’ll go for it, but 2009 is about just managing projects. Hopefully, quantitative easing and the government’s toxic debt insurance schemes will get things moving again.”
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