Manchester: Positioned for recovery

Manchester has weathered the recession better than its main competitors in the top tier of UK regional cities. As the year starts to draw to a close what are the prospects for investment deals, development schedules and construction order books? Special report in association with Corridor Manchester and New East Manchester.

Contents

►Development: Outlook improves for city fringe

►Investment: Funding update from Phil Basten, Bruce Poizer

►Construction: Andrew Russell gauges contract market

▼Occupiers: Meeting digital needs

Merely the latest buzzwords among developers and office agents or keeping up with a shift in the economy: how to judge property's race for digital and creative industry occupiers? Below, people on different sides of the media:property fence give their views…

Simon Wharton is managing director of PushOn, a Manchester-based search engine optimisation adviser, currently based in The Box Works on Worsley Street. Wharton said: "The nature of the digital sector is such that it almost automatically discovers efficient methods of working. Because we can stay in touch 24/7, many of us do. That doesn't mean that we work every available hour, it tends to mean that we are flexible in how we deliver projects. We don't always have to be sat in the same space. As an example, PushOn does not formally open its doors until 10am. However, we are often in contact via email/skype/twitter/basecamp from perhaps 7am. And at the other end of the scale, we may stay until late in to the evening. We often need very niche skills at a high level of expertise, which dictates what we need out of business premises.

"First of all we need connectivity. Internally, externally and easily. Whatever bandwidth is available, a creative digital sector will use it. Internally I need to be able to open up my laptop and go, whether wired or unwired. I need a space that suits what I want to do. Sometimes a formal desk layout just doesn't work. I need to be able to flex the space I occupy almost without thinking about it and environment is very important to me. I also need to gain access to a workspace when it suits me. We really do work in a 24-hour society. And sometimes my brain just works a lot faster at 2am. On top of that, I want to be surrounded by inspirational people who have been exploring their niche and can give me rapid responses if an opportunity comes up.

"It's this background of requirement which leaves me feeling that Media City's offering to our sector, if indeed it does have one, is rather hum-drum while the Sharp Project is looking extremely exciting. I had the privilege of a tour of The Sharp project delivered by Ken Campbell [boss of The Boot Room, a Manchester web design and digital video agency, involved in Sharp Project since day one]. That's a smart move. Having someone who understands digital agency requirements driving the project. As we walked round and he described the space and how it would scale, just about everything was something I wanted. The idea of a 'hack space' was just perfect. An environment where people could come together and share and be facilitated to do that.

"Media City hasn't said anything to 'me'. There's been a lot of talk of the undoubted benefits to the local economy, but would I move my business there? Not at those prices."

Bryan Gray, chairman of Peel Media, the subsidiary of Peel Holdings responsible for building and managing the Media City UK development. Gray, a former chairman of the North West Development Agency, said: "The basic approach is to build the occupier base around the BBC. There will be various other large occupiers that provide services to the BBC also moving to Media City. Their suppliers will then come in turn and so on. Our focus right now is on people that want to take a substantial amount of space.

"That said, as well as attracting the large companies, one of the objectives of Media City is to increase the number of business start-ups and business growth in the region as a whole. That is one of the main reasons why the NWDA supported Media City. We are reasonably good in the North West at starting up businesses but not so good at developing them. The University of Salford will have post-graduates and media students there and we hope that will generate start-up businesses who want to stay at Media City. But if they choose to move out to Manchester city centre or elsewhere in the North West that doesn't matter, the important thing is growing the creative sector in the region.

"Peel Media and the public sector are investing in a Media Enterprise Centre [53,000 sq ft in the south tower] and within that an incubation unit for start-ups. The MEC will be subsidised by Salford City Council and the NWDA to enable new businesses to have facilities that they wouldn't otherwise be able to afford. Once they have grown too large for the MEC they may wish to move out of Media City or stay.

"We are also talking to other universities in the North of England as well as overseas about basing PHDs in the MEC and using it as a front door for new companies.

"You have to look at the size of the project at Media City: it is 35 acres in this initial phase which is a relatively small market in real terms and frankly that will be reflected in rents. If you don't need to be in that prime space, paying prime rentals you need to decide if it's for you. It is a mobile industry after all."

Gray said the rents had not yet been decided for the MEC as it had not been completed and was not in the market yet. Cushman & Wakefield and WHR Property Consultants are joint letting agents on Media City UK.

Sue Woodward, director of The Sharp Project, a 200,000 sq ft workspace for digital content companies in the refurbished Sharp Electronics warehouse off Oldham Road in Newton Heath, east Manchester. Woodward, a former managing director of Granada Television, said: "The three priorities for us are connectivity, affordability and power. We want to bring people who create and monetise digital content together in a place where they want to be. That way we will create a powerful media hub that can rival anywhere in the country or Europe. We have stripped out everything that might put up the cost of developing this place [estimated to be between £15m and £20m by New East Manchester, the urban regeneration company delivering the project on behalf of site owner Manchester City Council], because that cost would have to be passed on to our customers. No carpets, there will be rubber floors. No air conditioning, we have comfort-cooling fans instead. Our first phase is 40,000 sq ft in suites of up to 4,000 sq ft priced at £10/sq ft plus service charges and broadband fees. We have several occupiers interested in moving in on completion in January. We will have smaller offices units in a series of former ship containers (pictured below) adapted to have windows and doors fitted. These will be stacked in a large central hall. We had an order for 50 containers but that has been increased to 62 – the maximum capacity for the space – due to demand. One container will cost £45 a week and two pieced together and opened up will be £75 a week.

"There are two former storage floors at the end of the Project of 30,000 sq ft each and we are talking to a content maker about taking one of them for two-and-a-half years at between £8/sq ft and £10/sq ft.

"We have signed a sound engineer for a 4,000 sq ft production studio and he will start fitting out shortly. The Casualty 1909 TV series was filmed in an 18,000 sq ft sound stage here and that will be stripped back ready for use by occupiers. There will be glazed garden area for events at the back of the Project overlooking the new Metrolink line and Central Park.

"There will also be an informal area for eating and drinking and for people who take an annual membership to come in and interact with peers and use the facilities from time to time. There will be a 1GB broadband pipe throughout, thanks to relighting existing fibre optic cables beneath the site.

"It is no good for Manchester us being here alone: it is important that we are merely one stop on a new digital loop around the city taking in Oxford Road, the universities and Media City. We are examining ways of running fibre optic links down the tramlines between the Sharp Project and Media City and round the rest of the city.

"This is a new type of digital content production complex, open 24/7 with links to global partners able to deliver continuous production for international projects."

Jackie Potter, chief executive of Corridor Manchester. "Funding is in place from the NWDA and contractors are being appointed shortly for a broadband loop that will provide 100 times normal broadband speed around Hulme, Ardwick, Oxford Road and Whitworth Street. We are promoting it as a living laboratory for residents and businesses. The area is strong in health and education, digital and technology and this is an experiment in cable-to-premises facilities to see what uses the community makes of it."

Northwest Vision & Media, the official support agency for the digital and creative sector, funded by the NWDA, recently moved into Broadway on the edge of Media City. Paul Taylor, director of business delivery at NWVM, said: "We have just moved into our new offices at Media City UK in Salford, opposite the Pie Factory studios. It's early days but MediaCityUK is going to be a huge catalyst for growth and a real focus for the region's creative and digital sector, so it makes sense for us to be there from the off. The North West already has a strong track record across the creative and digital industries with exceptional talent, a skilled workforce and excellent infrastructure, and we have very high hopes for building upon these in the future. It's a fantastic place and an exciting time for companies or people in the industry to come and base themselves."