As Manchester grows in stature, its office deals are growing too – with several recently over 100,000 sq ft. But do local agents have the experience to handle these mega-deals? By Noella Pio Kivlehan
Heard the one about the Manchester agents not being able to handle mega-deals? No? Well, the Mancunian property types have, and they are definitely not laughing. They take very much to heart the suggestion that they cannot cope with extremely big projects because they lack the experience.
Nobody likes to be criticised, and Mancunian agents are no exception. But opinion is divided about their experience and understanding of what goes into huge deals, with some questioning their capability.
There is no suggestion that Manchester’s agents are not good at their jobs. Rather, some observers are saying that the city’s historic lack of deals of 100,00 sq ft or more has left them lagging behind agents in other regional cities such as Birmingham, or in London.
In response, Manchester agents cite some of the 100,000 sq ft-plus transactions of the past year. There was the 500,000 sq ft Royal Bank of Scotland deal and the 160,000 sq ft Crown Justice Court, both at Spinningfields, not to mention ICL taking 150,000 sq ft at North Manchester Business Park. And this week the Lord Chancellor’s Department announced that it was looking for a new 280,000 sq ft Justice Centre office.
Moreover, developers such as Carl Richardson of Richardsons, which built The Printworks, have only praise for the city’s agents.
So why the negative comments?
Ironically, it is just these recent large deals that have prompted the questioning of agents’ ability. According to one local commentator: “These size deals are making Manchester agents realise that they have to up their game. They have to become more sophisticated, as Birmingham has already done. It’s really going to change the way the city works.”
The other contrast, of course, is with deals done in London.
According to Mike Ingall, chief executive of Allied London Properties, the group behind Spinningfields: “The difference between the London property market and the Manchester market is obviously that the London one is bigger – agents are used to dealing with development problems and they are probably more financially aware.
“When we started Spinningfields we had zero agency support, so much so that we were constantly reading agents’ comments that this development wasn’t going to happen.”
Ingall’s view could perhaps be attributed to his disappointment at agents’ early negative reaction to his project. But some Mancunian agents, at the risk of being seen as turncoats, agree with him – at least about the lack of London-style experience.
“In London, in the major practices, you will get people who have more experience of very large rents and tenants,” says Insignia Richard Ellis’s Simon Mitchell.
While it may not be entirely fair to compare a city of 400,000 with the heaving metropolis of 7m people that is London, Manchester agents do rate their city as fairly close behind the capital.
It’s “absolute rubbish” that Manchester agents are in any way lacking in experience, says Tony Bray of Dunlop Heywood Lorenz, adding that some recently negotiated deals are on terms at least second to London.
But even Chesterton’s Rupert Barron, who agrees with Bray, admits that deals of the biggest type do not happen often in Manchester. Hence, it is probably not agents’ fault if they haven’t the experience.
Barron says: “Some people don’t have the experience of dealing with the big transactions, which are not just about property. The requirement for space is just one requirement of a business’s needs.”
This point is one on which all agents, developers and local commentators agree: huge deals do have to be handled differently from smaller ones.
“It’s just a fact that, when you are handling those mega-deals, they are sometimes more complex – they have a lot to them,” says Mitchell. “You try to keep them simple but they naturally will be more involved because it’s unlikely they will be speculatively built, so you have prelet discussions and that is not so common in the regions.
“You have to be client-occupier focused. It’s the prelet people coming in who are your clients and you have to service them and make sure that the whole process is as painless as possible.”
Not only are very big deals done differently but also the bigger the deal, the more demanding the client. “The principle of dealing with the large deals is the same as dealing with the smaller ones, except tenants can maybe wield more power,” says Ken Bishop of DTZ, acting agent on the RBS deal at Spinningfields.
This deal is a prime example of how the big tenants get what they want – RBS influenced not only the design of the buildings but also the delivery date (see Case study, p112).
At the end of the day, though, whether an agent is in London, Manchester, Birmingham or the Outer Hebrides, handling deals comes down to much the same thing. As Halliwell Landau’s Mike Edge puts it: “Like any profession, it’s about getting the right person for the right job.”
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Manchester mega-deals |
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In the past 18 months, several deals – and potential lettings – of more than 100,000 sq ft have hit the market, helping to propel Manchester into the big league |
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” Victoria Exchange Zendor.com, the internet retailing arm of Manchester-based home-shopping giant N Brown, agreed a 100,100 sq ft letting at the city’s Victoria Exchange. ” Spinningfields Royal Bank of Scotland took 500,000 sq ft and the Crown Justice Courts 160,000 sq ft, both at Spinningfields. ” North Manchester Business Park Computer giant ICL last month became the first occupier at the Ask/Akeler North Park after signing a 150,000 sq ft prelet agreement. ” The Anchorage The 220,000 sq ft office complex, made up of four buildings, is up for sale at £36m. |
Case study
Royal Bank of Scotland
Allied London Properties’ Spinningfields development considered the 500,00 sq ft Royal Bank of Scotland deal important enough that it was prepared to listen to what the bank wanted and implement it – even designing the two buildings to meet its needs and speeding up the building project by a year. Completion was initially set for 2005, but is now due in 2004.
“It’s fair to say that securing RBS meant we have had to do things quicker than we originally programmed – up to 12 months quicker. But we do have a bigger momentum going to accommodate the bank,” says Allied London’s chief executive, Mike Ingall.
Given the size of the deal – one of the biggest that Manchester city centre has ever seen – it all ran pretty smoothly. Ingall attributes this to two factors in Allied’s approach: recognising what the bank wanted and applying a personal touch.
The official signing of the agreement last November, when the bank took the 350,000 sq ft 1 Hardman Boulevard and the 123,000 sq ft 1 Spinningfields Square – 80,000 sq ft of which it will occupy – meant not only that RBS was getting a tailor-made building but also that Spinningfields had a major tenant.
The RBS story started in late 2000, with Grimley acting for an undisclosed client and Spinningfields agent Dunlop Heywood Lorenz being approached. “Dunlop picked up on it pretty quickly, and we were quite lucky because early on in the process we were able to see the bank. We wanted to see it before its requirement was really public knowledge, so we could talk about it,” says Ingall.
“It’s very important in those big deals that you understand your occupier and what’s driving it. That was, and is, the key issue. Equal to that is that the building matches requirements in usability, quality and space.”
Those early meetings about RBS’s needs led to changes in floorplate size, delivery date and the image of the building. The bank wanted its headquarters to be a building on Deansgate – one of the city’s main areas.
“Between us, we had a lot of fun designing the buildings, although we had a lot of challenges in terms of providing very large floorplates,” says Ingall.
He is confident about the buildings that ALP and RBS have together designed: “We have our aspirations as to what Spinningfields will produce, which is that the buildings we put up will be the examples of corporate office buildings in Manchester – modern in every way.”
Ingall will not talk about any of the financial aspects of the deal, but market rumour says the agreed rent was just under £25 per sq ft.
It is widely known among Manchester agents that RBS guards its privacy – to such an extent that the agent who helped to finalise the deal, Ken Bishop of DTZ, will not even confirm that he took part.
Secrecy aside, the deal remains a landmark for Manchester and one that others will hope to emulate.
Occupiers, p92
