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)
