Downing's First Street project is one of several schemes giving confidence to the co-living market in Manchester. Credit: via planning documents

The Subplot

The Subplot | Co-living, freeports, big money

Welcome to The Subplot, your regular slice of commentary on the North West business and property market from Place North West’s analysis editor, David Thame.


  • Co-living’s big moment: is the flat-share rental concept reaching a turning point?
  • Elevator pitch: your weekly rundown of who and what is going up, and who is heading the other way

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Money plus hope equals opportunity

So far co-living has moved fast in Manchester, and hit the planning buffers in Liverpool. But could money and opportunity be about to create a moment for growth?

Co-living – the flat share rental concept – has had an uneven start (Subplot, 23 March 2021). Planners in Manchester gave approval for a limited trial run but with plenty of reservations, while in Liverpool emerging policy seems to make co-living all but impossible (Subplot, 13 January 2022).

In Manchester, enabling works began in January 2022 on Downing’s 2,224-bed, 45-storey plan for First Street ahead of a projected March start on site. The recent £338m portfolio sale to Greystar means the Downing war chest is full – so no issues there. Meanwhile, Vita Living is at work on a 1,676-unit scheme at Water Street. All of which sounds encouraging, and fairly safe in a city with a huge student population, meaning both projects have guaranteed residual value. But these super-sized pioneers have only a small following pack. Could this be about to change?

Something stirs

The financial conflagration at The Collective – pioneer of the co-living concept – unsettled confidence mid-pandemic. The market is still digesting the fallout. US private equity giant Oaktree Capital said in February it was planning to create a £1bn London-based co-living portfolio by backing Balance Out Living, a business formed by two former Collective executives. Having secured its first planning consents, that business is on the market, it is reported. It looks like rapid profit taking, which would be encouraging, although it could be cold feet, which wouldn’t.

Small but viable

Data from Savills supports either view, although the tone of the document is heavily tilted towards the upside. The research published a few weeks ago pointed to a pipeline of 24,000 units and projected £550m of co-living deals in the first half of 2022. The figures suggest the “core market” of potential users is around 47,000 in Manchester and 14,000 in Liverpool out of a nationwide total of about 725,000 (but rising to 1.5m if you assume it appeals to older age groups). Either way this isn’t going to be a mainstream market, although handled properly it is probably a viable one.

Trickle down

Those pipeline figures turn out to be more complicated on closer inspection. Operational units outside London total a tiny 428, say Savills. In Manchester, there are 404 units under construction, permission for another 3,194, and another 940 in the pre-planning process, making it the busiest local authority for co-living. If there’s 47,000 potential occupiers that means approaching 10% of the market is already catered for, or soon will be. That’s a fair chunk.

Local heroes

The North West’s pioneers – Oppidan Life (a Subplot sponsor) and Beech Holdings – think their time has come, or is coming. “The most positive point Savills makes is their estimate of 725,000 people being in the core market yet only 24,000 units operational and in the pipeline. 5% of these are in the Oppidan Life pipeline of 1,240 units in three cities,” says Oppidan’s Colin Shenton. “Stabilisation, steadiness and fund management metrics may sound dull but they are the reason co-living will become an essential component of every institution’s portfolio and for all stakeholders.”

But for newbies

For other entrants the difficulty is the debt market, which is still getting its head around the idea. So far it is mostly non-bank lenders, but that is changing. Yields heading towards 4.5% make for interesting calculations, and more names to the funding market will mean more development. The largest funding deal so far – a beefy £200m in Croydon – is, for the time being, an outlier. The second half of 2022 is likely to see proof that the narrow pool of lenders is growing sufficiently fast – or not.


Going up, or going down? This week’s movers

It’s a good time to press the “up” button and take advantage of the soon-to-be-active Liverpool Freeport. Big money is also coming up, thanks to Asia-Pacific interest in UK real estate.

Freeport adjacency

The sprawling Liverpool Freeport, focused on the Port of Liverpool but stretching as far as Salford, was always going to be hard to get going. A final business case is now with the government, the freeport’s organisers say they are at the “critical action” stage, and it looks good. The plan had been for a formal start (and a £25m dowry) in early summer. The prize, if and when it comes, is up to 7.3m sq ft of new floorspace and 14,000 gross new jobs, directly and indirectly.

In the meantime private sector interest is inevitably focused on adjacent sites. The latest move sees Cole Waterhouse submitting a detailed planning application for almost 300,000 sq ft of logistics development on a 15.7-acre site, next to the M60 and the Port Salford tri-modal port facility. The scheme will comprise two units, providing 173,180 sq ft and 126,560 sq ft logistics space and will be delivered by autumn 2023. The land was acquired from CosCos, the joint venture company between Salford City Council and Peel L&P.

Big money

Intra-departmental argy-bargy seems to have slowed progress on the long-awaited Solvency II re-think, a change in the rules intended to free huge volumes of insurance and pension fund capital for investment in regeneration, housing and sundry good works (Subplot, 24 March). The latest nods and winks suggest the Prudential Regulation Authority is, as the name suggests, taking a prudently conservative view of the resources insurers and pension funds need to keep on hand, and that means less for levelling up. HM Treasury and Downing Street are said to be impatient with this approach.

But don’t despair, the private sector is already investing heavily. Subplot reported last week on the £1bn-ish deployed in the North West in the last few weeks, a large part in the office market. (Subplot, 30 June). In London it’s yet more dramatic and provides a glimpse of what may come next in this region. Cushman & Wakefield calculates £7.95bn was transacted in London office property in the first half, with a further £4.5bn under offer. Interestingly, 47% of the second quarter money came from the Asia-Pacific region, still modest players in the North West, but likely to be arriving in force soon.

Get in touch with David Thame: | 01544 262127

The Subplot is brought to you in association with Oppidan Life.


Your Comments

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I will be interested to see how the Freeport plans will be affected by both environmental, logistics and fuel cost concerns that have arisen since it was conceived.
Offloading mega ships onto polluting barges and sending those up the river to Port Salford always seemed a bit of a flight of fancy. Even more so now.

By Jeff

Polluting barges? Really Jeff? You don’t think the thousands of tons of bunker fuel being burned by most of those mega container ships would be where the real problem lies? If those goods are coming in at all they’ve got to get to where they are going to be used. That’s why we built the ship canal. It worked then and it great to see it still working.

By Anonymous

The ships are unavoidable with no alternatives. The barges are avoidable. 19th century solutions to 21st century issues, increasing no2 levels inside borough boundaries. And then there is the disruption aspect and fuel costs on top. The latter in particular. Pound for pound, barge is not going to stack up versus rail or even road on all counts, even before the lawyers get at it.

By Jeff

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