North West Property Blog

Following the departure of our North West editor David Quinn we will, for the time being, be posting North West focused content on the main Focus blog, so please pop over and have a look.

There is a North West category if want to quickly find what we've written. Daniel Cunningham is taking over news hound responsibilities for the North West, email him with your tips.

A report launched last week by Colliers CRE at the Palace Hotel in Manchester shows that despite the vague scent of positivity that seems to be hanging in the air, retail landlords are still somewhat in the muck. Retail rents in the North West are expected to fall by 13.1% this year and by 7.6% next year, which sounds pretty bad, altough it's pretty much in line with national trends.

The Trafford Centre is one of only two places in the region where rents are static. The £400 per sq ft Zone A has been maintained in the face of falls in every other retail location in the region, except for tiny St Annes-on-Sea on the Fylde coast. I was in the Trafford Centre on Saturday and noticed a branch of Subway has been crammed in next to the Apple store on the upper level, which initially struck me as a bit bizarre but perhaps points to the management's willingness to experiment with tenants in order to keep deals ticking over.

Colliers' Nick McAllester says landlords in the North West have realised there is no advantage in seeing units stand empty and are willing to offer "soft" deals, including turnover-based agreements, in order to draw in retailers. These, alongside lengthy incentive packages, have led to a significant decrease in net effective rents.

I'm back from a relaxing week off and find my attention drawn to Spinningfields. Not just because of another 10,000 sq ft letting at 3 Hardman Street (the GMC taking extra space, this time) but because of something that's happening at one of the older buildings on the estate.

It seems that for the duration of the forthcoming Manchester International Festival, Quay House on Quay Street will be handed over to maverick documentary maker Adam Curtis and production company Punch Drunk for what is probably best described as a spooky live-action documentary experience, called It Felt Like A Kiss. As the blurb on the festival website puts it:

Imagine walking into a disused building. You find yourself inside a film. It is a ghost story where unexpected forces, veiled by the American Dream, come out from the dark to haunt you...

As this daring production unfolds across five floors, blending music with documentary and the disorientating whirl of a fairground ghost train, the audience is forced to face the dark forces that were veiled by the American dream - a dream that ultimately returns to haunt us all.

Those attending are warned to expect "graphic scenes of strong violence" and should wear "suitable footwear" because of "uneven ground surfaces". (I've got my Adidas at the ready.)

The last time Quay House was in the news was when Manchester city council was looking at it for a temporary office requirement. But let's face it, It Felt Like A Kiss sounds a much more interesting way of filling the space.

Here's the trailer for the project. Be warned, it's a bit weird.

I took a visit to MediaCityUK in Salford earlier this week and was impressed, although not surprised, about the progress of the scheme, which now has around 1,700 construction workers on site.

Peel Holdings is clearly confident about the prospects for MediaCity. Although it's anchored by the BBC, it would be a mistake to describe the development as pre-let, since there is a massive amount of speculative space being built. Of the 700,000 sq ft of commercial space being developed, just 433,000 sq ft has been let, of which 330,000 sq ft is being taken by the BBC. This leaves 267,000 sq ft available in a mix of floorplates between 6,000 and 30,000 sq ft.

The BBC starts its handover towards the end of this year and it is expected that the studios will be operational at the end of 2010. The University of Salford - so far the only other occupier - will be opreating out of MediaCity in time for its 2011 student intake.

It's clearly not an ideal time to be bringing large residential apartment schemes to the market but as Peel development director James Whittaker points out, the scheme's resi element has the advantage of appealing to BBC staff. The broadcaster will have confirmed the details of staff relocations by 30 September and Whittaker expects a large demand for rental property, which Peel could provide. The developer's position is enhanced by the generous relocation costs that will be paid by the BBC to staff who are making the move.

I was a bit surprised by the size of the outside space included at MediaCity. A plaza in front of the BBC buildings has capacity for live outdoor events for up to 9,000 people. In addition, the scheme includes a fair chunk of green space, which stretches right down to the water.

I've annotated a couple of photos of MediaCity on Flickr, so you can see which bits of the development are which. 

Photo by EGFocus. Some rights reserved under Creative Commons. 

Here's another image of the new Greater Manchester Police headquarters, to be developed at Ask:Goodman's Central Park, as mentioned in EG this weekend. The 240,000 sq ft Aedas-designed building will apparently be lit up like a "glowing tardis" and will be visible from Piccadilly.

Manchester city council's decision to move temporarily into Ask Developments' First Street scheme (pictured) appears to be one of those deals that suits everybody concerned, despite the mess that was initially made of the announcement.

The council's statement in April that it would not, after all, be moving to Spinningfields (despite saying a few weeks earlier that it would) threatened to expose unusual fissures between the local authority and two of its favourite developers, Ask and Allied London.

While the council published a press release saying its decision not to go to Spinningfields was because it could get better value elsewhere, Allied London boss Mike Ingall appeared to contradict that, stating:

"For us to tie up part of the site in a temporary letting to the city council would have meant tying up land at a time when that felt increasingly like the wrong thing to do. So the decision was a mutual one, perhaps even slightly more our decision than theirs."

Although Ask, and partner Morgan Stanley, will apparently recoup little or nothing in rent from the council, it is likely to be pleased that the mega empty rates bill for the 180,000 sq ft Number 1 First Street is off its books. Big occupiers are not exactly falling over themselves to take space anywhere in Manchester at present. And, even if they were, a three-year rent-free period is currently par for the course, meaning the developer has lost little by linking up with the council for that period.

Meanwhile, Allied London can't be too upset about the fact that it lost out on bringing the local authority to Spinningfields. My sources say Allied hatched the council plan when it realised PricewaterhouseCoopers was set to walk away from a deal to take 72,000 sq ft at 3 Hardman Street - which, ultimately, it did. But when the developer sensed more profitable deals in the offing, it opted to back away from the council deal. Allied's judgement was right. Most of the space at 3 Hardman Street that had been earmarked for the council is now likely to let at somewhere between £28 and £30 per sq ft to PKF and Beachcroft - albeit with a big rent-free period attached.

At the same time, the council became nervy about possible political fall-out from taking one of the city's best and most expensive buildings - 3 Hardman Street - at a time of recession. When I contacted the council in March to clarify which Spinningfields building it was planning to occupy, it refused to say - a clear indication of the sensitivities around the subject.

Ultimately, though, it seems everyone is happy. The council gets affordable, efficient space under one roof, Ask gets rid of its rates bill until the market recovers and Allied London hoovers up yet more professional occupiers. Isn't it great when a plan comes together?

 

EGi subscriber links:

Manchester council confirms Spinningfields move (4 Feb 2009)

Manchester rethinks city hall move (3 April 2009)

Ask Developments lands Manchester council relocation (26 May 2009) 

 

I'm currently in the final stages of putting together the features content for the Merseyside Focus. There's an interesting piece about retail by David Thame, which predicts what's likely to happen on three major schemes by the end of the year. The industrial feature is looking at the uncertainty that's surrounding the manufacturing sector, especially at Vauxhall and Jaguar Land Rover. There's also a feature about the draft planning guidance for Liverpool's World Heritage Site - a document that seems destined to ruffle a few feathers, especially those of a certain massive airports-to-shopping centre-owning property company beginning with P.

It's published in EG on 27 June.

My colleague Stacey Meadwell has taken some photos of Grosvenor's Liverpool One, which celebrates its 1st birthday today, showing that quite a few of the smaller retail units are yet to let. As can be seen here, there's a concentration of vacancies around the designer-led Peter's Lane part of the scheme. The photo was taken on a Friday morning earlier this month.

This bit of Liverpool One opened in the second phase last autumn and arguably hasn't been helped by the fact that the flagship Top Shop here has not yet opened. Once Top Shop opens during the summer, it's likely that footfall here will rocket, perhaps encouraging other retailers to move in.

Liverpool One's management has agreed monthly rent payments with some tenants although only one retailer - Principles - has so far been forced to close. Zavvi is now trading as Head, following a buy-out by former Zavvi chief executive Simon Douglas.

Grosvenor says the scheme is 96% let overall, while Liverpool has climed to 5th overall in the Experian retail rankings since Liverpool One opened.

Photo by Stacey Meadwell used under Creative Commons

This is the new Express by Holiday Inn hotel at Smithfield, in Manchester's Northern Quarter, which has recently been granted planning permission. I suppose it's a matter of taste about whether Smithfield needs another big-box hotel. A lot of the Northern Quarter is feeling quite mainstream these days, particularly the bar strip along Thomas Street. Still, developer Muse, which has been involved in the area since 2001, says its design will be sympathetic to the Northern Quarter's unique qualities. As a bonus, a 14,000 sq ft public square is also included in the plans. The hotel is expected to open in 2011.

I've received an image of the new "Heart of Africa" development, which is in the pipeline as part of a wider redevelopment of Chester Zoo known as Natural Vision. It's expected to go before planners later this year and includes new animal enclosures, as well as a hotel. There'll be a bit more about this in EG on 13 June.