COMMENT: Manchester is experiencing record levels of investment in its office market – and this is the result of a growing confidence in the city being a viable alternative to London, writes Ian Cody, director – asset management, at Hermes Investment Management.
As a result, the city council has become a prime example of how, through nurturing innovation and a commitment to placemaking, it is possible to attract investment and regenerate older sites.
Manchester has seen the fastest city centre population growth rate in the UK, with an increase of 149% between 2002 and 2015. Net migration to the North West was also positive for the first time in a decade last year, which in part has led to demand for office space growing by 68% from 2016 to 2017.
Young professionals have formed a key part of this growth. Manchester has the second-highest student retention rate in the UK behind London. There is no doubt that the city’s rich cultural heritage has played a factor in this.
Rise to the challenge
However, to maintain these levels of growth, the property sector must rise to the challenge of creating an enviable environment for communities to thrive in.
In the residential sector a burgeoning array of new communities such as Moda’s Angel Gardens scheme at NOMA provide homes for long-term rent that fit with modern lifestyles. Alongside the cultural landmarks that pepper Manchester’s Victorian streets, this is helping to avoid the brain drain that is hitting many regional cities.
As this growth continues, there will also be a need for more office space. For the past four years office take-up has exceeded 1m sq ft, and there are no signs of it slowing down. However, this new office space needs to meet the demands of modern businesses.
Cost and value are key considerations for many occupiers who seek efficiency savings across the board, and with the cheaper housing on offer, firms are looking North. Indeed, London First has found that 72% of companies think the capital’s housing costs put economic growth at risk.
Quality communities
Nonetheless, while many occupiers are cutting down on costs, they still demand quality communities that can help attract talent. Having a workspace that forms part of a destination is the only way to think about things.
This is why NOMA’s focus is on bringing forward heritage buildings at a range of price points. In the current climate, a high-spec workspace, with iconic architecture that retains original features, is increasingly sought after by companies seeking personality and not just functionality within space.
Alongside this, rustic stripped-down buildings that are being turned into co-working space for start-ups are sowing the seeds for a new tech heart in Manchester. A prime example of this is The Federation – a converted historic warehouse building that now provides a blank canvas for occupiers.
Together with The Federation, Dantzic – where construction started last month – will provide 115,000 sq ft of offices opposite Manchester Victoria station. In addition to this is the redeveloped Hanover House, which offers 89,500 sq ft of offices alongside 18,000 sq ft of shops, all set inside a historic grade II-listed building.
New public realm
Placemaking has also been fundamental to our approach at NOMA, which is why we have created a new public realm at Sadler’s Yard. The area has been brought to life with a calendar full of curated arts, music and fashion events. Many will have seen our hand-built pub, The Pilcrow, which has proven a popular draw with local start-ups and celebrities alike.
Conversations around “north-shoring”, where corporates move backroom staff north to save costs, often come part and parcel with trepidation that those leaving the capital will be making a steep trade-off on leisure options.
Even though occupiers and their employees are increasingly price conscious in their office space, companies that want to attract the best talent still have demands from the places they go to. Good homes. Proper infrastructure. Retail and leisure options that go beyond the brand names that you see on every high street. Make the place, and they will come.
