Landsec eyes start for Mayfield’s £400m first phase

During a briefing on its financial results, developer and investor Landsec announced that it plans to begin work on 320,000 sq ft of offices later this year, saying the occupational market is “thriving”.

Landsec will fund the first £400m phase of the Mayfield mixed-use project to deliver two office blocks, as well as a 581-space multi-storey car park.

The investor struck a deal in November with the Mayfield Partnership, which is made up of Manchester City Council, Transport for Greater Manchester, LCR, and U+I. This drawdown agreement unlocked the potential for construction to commence on the 24-acre district.

Landsec’s announcement comes as the company released its results for the year to April, which saw a strong demand for office and retail space with rising rent and occupancy levels.

MOAF’s latest statistics for the Manchester office market showed continued strength for occupier demand in the city centre, encouraging developers to build more stock.

However, rising interest rates and a challenging investment market led to a £622m loss before tax for Landsec, compared to a profit of £875m in the previous year.

Mark Allan, chief executive of Landsec, commented: “Last year saw the most striking difference in performance between occupational markets and investment markets that I can remember.

The pre-tax loss comes as a result of the combination of disposals and falling values that wiped more than £800m off the company’s portfolio value.

Despite its loss, Landsec reported a decrease of £900m in its net debt following the disposals and remained confident in its strategy.

“Our strategy is based on two clear and simple principles: focus our resources where we have a sustainable competitive advantage and maintain a strong balance sheet.

“We have done both and, as a result, were able to navigate the challenges of the past 12 months very effectively”, Allan continued. “Our competitive advantages remain the high quality of our portfolio, the strength of our customer relationships, and our ability to unlock complex opportunities.

“Looking forward, we expect the combination of a ‘higher for longer’ interest rate environment and the continuing concentration of customer demand on the very best space to result in exciting opportunities and continued positive rental growth for Landsec.”

When asked about Landsec’s plans for MediaCity, Allan stated that we could start to see development there in the next five to 10 years. The company acquired 75% of the asset in 2021 and has since gained outline consent for 1.6m sq ft of office and residential space.

Architects Bennetts Associates and Morris + Co designed the Mayfield offices.

Landec’s share price increased by 2% to 632p this morning.