The rise of WeWork, the demands of a growing millennial workforce, and Manchester’s next top area for offices were the hot topics discussed by a panel of experts at this Place North West event.
More than 150 people attended the conference at Manchester’s Science & Industry Museum, sponsored by Hydrock, JMW Solicitors, Kier Property, and Malcolm Hollis.
Speakers included Julian Lipscombe, director of Bennetts Associates; Melanie Jones, managing director of All Plus Management and director at Allied London; Caleb Parker, co-founder and chief executive of Bold; Hydrock technical director Chris Bowie-Hill; and Andrew Cowell, director of transactions and office management at OBI.
See below for slides and photos
The event began with a presentation by Hydrock’s Bowie-Hill focussed on wellbeing in office design.
- He argued it was a “win-win-win” situation for investors, occupiers, and staff to create workspaces that offer “forward-thinking and future-proofing” for all three parties
- As well as improved staff wellbeing and retention rates this provides a better product for investors and stronger yields
- Investors needed to react to the demands of the millennial workforce: an “experiential generation” who are becoming less likely to go into low-quality stock
- As well as this, there was a commercial case for designing offices for staff wellbeing, with measures including better access to daylight, air quality, and acoustics shown to reduce absenteeism and improve staff retention rates
Manchester office statistics
Andrew Cowell of OBI then took to the stage to give an outline of office take-up in the city and the future development pipeline.
- Take-up in the last five years has been strong, averaging around 1m sq ft per year. So far, around 1.2m sq ft has been taken this year, including Booking.com’s deal at St Johns, described as the biggest pre-let in the city for 16 years
- Manchester is now on course for a record year with OBI estimating more than 1.5m sq ft will be taken by the end of the year
- More than 50% of transactions this year have been for £20/sq ft or more in Manchester city centre; this has been a reflection of investors repositioning older buildings and bringing them back to the market, and removing low-quality stock
- E-commerce and software firms have been the most active, with 12 deals by the former and 13 deals for the latter. The sectors are no longer taking cheap, mid-range space, he added, with landlords providing space on flexible terms and adapting to meet the rise of tech occupiers
- There is currently less than one year’s supply of Grade A space in the city centre – only four buildings can house a requirement of 30,000 sq ft and above. But there is 1.4m sq ft currently under construction with more coming forward, and much of this is still available
Learning from London
Following Cowell, Julian Lipscombe of Bennetts Associates outlined the architecture practice’s placemaking strategy for a new commercial area King’s Cross in London, and how these principles can be applied elsewhere.
- Designs should be about creating place and connection, a buzz and vitality, rather than creating “a commercial ghetto” that is disconnected from the wider city
- The key theme to King’s Cross, he said, was “creating a place first with the buildings following after”; place creation was “vitally important” to the success of making new commercial hubs
- “The industry has been pumping out office space without a great deal of thought of what occupiers want, but that circle is now being closed”, he said
- However, he also warned future development would not be “to pick up King’s Cross and plonk it in Manchester”; other unique places, including around Piccadilly Station where Bennetts is acting as masterplanner, can be created
What tenants want
A panel discussion then followed featuring Bowie-Hill, Cowell, and Lipscombe alongside Caleb Parker of Bold and Melanie Jones of Allied London.
- Parker said that commercial landlords were now broadly faced with three choices when it comes to flexible office space: “They can keep leasing to WeWork; they can set up their own business like British Land have done, which can be risky; or they can partner with companies to provide turnkey solutions where they can benefit from increased margins”
- Cowell said WeWork had disrupted the market and was “here to stay: they have created design-led solutions to give occupiers activation and made landlords and developers become more conscious of what tenants want”
- Lipscombe said: “The madness of the office fit-out world is that a business can love a location but can rip-out original fit-outs and put it in a skip. The next evolution is to give businesses the opportunity to really personalise their space, and keep buildings flexible”
- Bowie-Hill agreed, arguing flexibility needed to be built into office design early: “It’s not about materials but about getting the shape of the building right”.
- Jones said Allied London’s approach was to talk to occupiers before construction begins to adapt buildings to tenant’s needs; the alternative is to have space as “purely shell-and-core” to keep it flexible before tenants are secured
- Asked to pick the next hotspot of office activity in the city, Cowell said Ancoats would be the place to watch, where “pared-back buildings rather than big glass boxes” will dominate. Rents here are expected to be around £25/sq ft
Trends to watch
Each of the panel members then picked one trend to watch over the next five years.
- Parker said it would be important to see how flexibility of tenure impacted the valuation model for buildings: “Instead of valuing offices on long-term leases, it’ll be about valuing them on a turnover basis, much like hotels – it’s riskier, but there are higher rewards”
- Jones said collaboration between landlords and tenants would increase – “we need to be facilitating the working practices of the tenants who will be using our buildings”
- Bowie-Hill argued that an increasing millennial workforce would have a greater influence on design, including the need for more natural light and increased floor-to-ceiling heights
- Lipscombe said the rise of WeWork would continue to disrupt the market which is forcing architects and other designers to “raise their game” to adapt to a rapidly-changing market.
- Cowell agreed, saying that managed office space would continue to be prominent driven by demand from the technology and e-commerce sectors
The slides from the day are available below:
Click any image to launch gallery