The Subplot

The Subplot | Co-living, levelling up and spies

Welcome to The Subplot, your regular slice of commentary on the North West business and property market from Place North West.


  • Co-living schemes are moving ahead in Manchester. Private equity players think they have spotted an opportunity for high returns. Are they right?
  • Boris Johnson’s ‘levelling up’ agenda provides a £4.8bn property opportunity which North West developers are hoping to exploit.
  • Shh. Don’t tell a soul. The latest on North West spy property.

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Renting to Generation Z

Downing is free to go ahead with 45-storey plans for co-living in Manchester after a final planning obstacle was overcome for the 2,224-bed scheme (pictured). More developers will follow. But how do you price the risk in an all-but-untested sector?

Co-living is the short-term let, flat-sharing version of build-to-rent. It is targeted at post-college young professionals and is marketed with a strong whiff of the Generation Z wellbeing/kindness bromide. It is a niche within a niche. A handful of small-scale Manchester options (see Oppidan Life), and another handful in London (see Gravity Co-Living) sit in the shadow of one sizeable player, Reza Merchant’s The Collective. Downing – and Vita and IQ, which between them add more than 1,000 further bedspaces in Manchester – are entering a market so new it still smells of the box.

Pick a number

The trouble is that nobody has a clue how much demand there is for such a novelty product. Fortunately we can conjecture by looking at similar (though different) products in Manchester. The answer seems to be comforting for developers and investors, because however small it is, it is easily bigger than supply.

So, for example

Beech Holdings’ Westpoint scheme in Trafford is “co-living-style” single occupancy (not the full co-living flat-share). According to its chief executive Stephen Beech, 3,000 enquiries a month about Westpoint (and 100% occupancy) suggests demand for co-living in the city will be strong. It also suggests he should expand, which is what he’s going to do. Beech is preparing a £100m second phase, adding 600 bed spaces to the 317 Westpoint has already, branding it Urban Collective (another nod to that Generation Z vibe). Beech says: “Young graduates have been telling us this is what they want since 2015, so to anyone who doubts the evidence for co-living, I say the evidence is here.”

Place your bets

The people who control the money like the sound of this. Beech secured £130m plus equity from Saudi-based AIMS Investments. Last week, The Collective secured £28.5m from private equity innovators Cheyne Capital, funding that allows it to buy a site in West London. This is Cheyne’s third investment with The Collective, and it is hoping to reap a first-mover advantage. Subplot has heard various estimates of the kind of returns investors have in mind and 7% yields get mentioned. In today’s low-return world that is more than enough to attract private equity and private office wealth with a moderate appetite for risk.

Developers explore

Scenting investor interest, other developers are checking out the prospects in both Liverpool and Manchester. For many, this is simply one of many due diligence exercises to maximise site value (senior living, BTR, students are also getting checked out). Others are more seriously pursuing co-living. John Cooper, planning partner at Deloitte, and an advisor on the Downing application, says: “There has been fairly significant developer interest. But it is not a firm proposal, it’s an option. It’s about understanding the risk profile, the rewards, and the planning issues, because so far this has not been entirely straightforward.”

Vibe check

There are dangers. Vastly expanding the supply of co-living space would, given the unknown depth of demand, be the worst possible thing for this early-stage market. With so much money washing around, and not much evidence to prick the bubble of confidence, it would be easy to overbuild. You only need to look at the dire fate of casual dining to see what a mess that leads to.

We heart the city council

Everyone Subplot spoke to agreed over-supply was the immediate risk. Fortunately, Manchester City Council has inadvertently minimised the danger by imposing a cap of 5,000 units on city centre co-living development, and by restricting new-build to a handful of locations. With a pipeline of 3,500-plus units already consented this is a mighty comfort to developers (and a spur to new entrants).

Collective failure

The market would really light up, and prices/confidence soar, if The Collective decided to add Manchester to its chill list of global venues. Subplot asked The Collective several times when it plans to expand to Manchester, and got no answer.

If it all goes wrong

But suppose co-living is a dead end? Suppose demand is shallower than enthusiasts believe? Suppose fashions change – and fashion matters a lot to co-living’s hyper-self-conscious target audience? How do investors price this risk, and where is the residual value? Once again, the city council has their back, because officials have been insisting that co-living schemes be capable of repurposing if the experiment fails. Forewarned, developers have been careful to create buildings which require no hyper-expensive M&E adjustments and with internal walls can happily be rearranged. The residual value – and potential to convert into student housing, hotels, apartments or even offices – remains. Investors are delighted.


As so often in the North West, property decisions boil down to demographics. Stephen Hogg, head of North West at JLL, says: “Co-living has a place in Manchester, as with all large urban centres, to give residents maximum choice in accommodation. Those cities with a younger population – Manchester and London being the only two [UK] cities with over 45% of the population being under the age of 35 – need to fill the gap and co-living gives this audience more choice and more quality accommodation.” JLL says it had a stellar first quarter of 2021, with Manchester residential lettings 105% up on the same time in (pre-Covid) 2019. JLL deduces that demand for co-living would also be strong. Sometime soon we’ll discover if that is right.

Conclusion: Big-ish risks mean big rewards for hard-headed investors in a scalable property niche trading heavily on Generation Z’s cherished values.


MANCHESTERS GROWING SPY CLUSTERManchester’s growing spy property cluster

More spies are coming to Manchester following the announcement in the Government’s Integrated Defence Review that the new National Cyber Force will be taking up residence there. Does anyone know where or when?

Subplot doesn’t like to say told you so, but readers of the 19 January edition will not be surprised that Manchester’s formidable spy property infrastructure is getting another boost. The National Cyber Force will have a range of offensive and defensive capacities including hacking mobile devices, patrolling cyberspace, and preventing fancy weaponry from doing its worst.

Under the radar

The National Cyber Force idea first emerged in 2018, but has been slow moving thanks to turf wars and various high-level distractions. So don’t bet on any big requirements emerging soon. Subplot’s spy property contacts didn’t have an inside track, except to remind observers that the National Cyber Force is a joint venture between the Ministry of Defence and GCHQ, so some overlap with GCHQ floorspace is probable.


Cratus Colm Howard LloydBounce back better?

Well-meaning plans dreamed up in Whitehall can help new buyers into the market, but often come with narrow criteria, writes Cratus director of public affairs Colm Howard-Lloyd.

Help To Buy has made a difference, as has the Stamp Duty Land Tax holiday, while the Mortgage Guarantee Scheme holds equal promise. The Government seems to have accepted that we don’t just need to get things back to where they were pre-Covid; we need to go beyond. Significant investment has been promised in our towns and cities, and we need this to continue.

Local authorities, too, are waking up to the idea that it no longer works to write plans and then hope the market will deliver. It is only with public-private partnerships that they will have any chance of realising housing targets and regeneration goals.

With stretched budgets in the public sector, thoughtful, well-structured partnerships can meet the needs of both local authorities and developers. Land held by councils and the NHS can be put to much-needed use so that the housing mix properly reflects the current and future needs of the community: student accommodation, homes for the elderly and disabled, homes for single persons and larger families can all be built in the same communities.

The Towns Fund, which could allow places like Bolton, Cheadle and Rochdale to shine once more, is much-needed investment, but unless it’s used smartly it risks missing its goal.

Only with local authorities placed in the role of master-planner, and ambitious public-private partnerships, will we see real regeneration in the North West.


Levelling Up Boris JohnsonThe rush to ‘level up’

The Government’s newly announced £4.8bn Levelling Up Fund presents real opportunities to developers. One North West operator has teamed up with investors to make the most of a here-today, gone-tomorrow chance.

Genr8 long ago joined the UK arm of Tokyo’s Kajima Corporation to develop the £80m first phase of the Rochdale Riverside leisure and retail scheme. The scheme’s £50m phase two is now underway. Last week, the pair deepened their relationship with an eye on Boris Johnson’s levelling up agenda.

Big wins

The new UK-wide partnership will focus on town centre regeneration projects throughout the country and is already in conversations with local authorities. There could be as many as half a dozen new projects, from tiddlers measuring in the tens of millions of pounds, to major interventions of £200m-plus. Evidence of previous success, and of deep financial backing, will help persuade local councils, and the Government, that the money will produce rapid results. Ideally, results are required before the next general election in 2023/24, because those Red Wall seats won’t defend themselves, will they?

Foot in the door

Moving fast is important for Genr8 and others heading into this potentially valuable market. To deliver, ready for 2023/24, requires a partner council with a pretty clear idea of what it wants, the management capacity to achieve it, and a site/scheme that is all-but oven ready. There aren’t many opportunities which meet all criteria, and those that do will by now have eager-to-please developers all over them like measles.

The Levelling Up Fund represents a window of opportunity, but it is closing fast.

The Subplot is brought to you in association with Cratus, Bruntwood Works, Savills and Morgan Sindall.

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Because this article mentions Government jobs being allocated to Manchester again I believe I have a right to post about it. When I started my employment journey in the 1970’s the centre of Liverpool was very similar to the City of London, in the jobs, banking, insurance, shipping, Stock Exchange and various commodity trading exchanges plus the home grown industries of Littlewoods, pools and retail. These provided well paid white collar jobs and helped to create a good social mix in the city centre, in fact like the “old” City of London, the business area was very quite at the weekend. Since then the loss of employment through closures, different trading patterns and relocations has greatly diminished the skill sector particularly for higher end white collar and senior management roles. It could also be said a lower employment base “ghetto” was being created by the loss of Civil Service jobs to other parts of the region. The effect this has is not just economical but political and cultural too, with the middle class becoming less prominent the tendency to vote for just one type of party has become cemented in the psyche of the electorate and thus ending in the current debacle of the immiment establishment of Government commissioners to run the City. The Government has chosen not to award Civil service jobs to Liverpool on the scale and frequency of other regions and have they compounded the situation even more by ensuring a “brain and skills” drain is in effect? I say good luck to other areas that are gifted these jobs but the Whitehall must think of the long term effects it has on cities such as Liverpool. Now some may say we have just been awarded a “freeport status” and quite correct, but we will have to create these jobs and earn the trade to sustain them, unlike others who are gifted well paid career employment opportunities. That is my opinion and I do hope the Government reconsiders it’s dispersal of future employment opportunities,

By Liverpolitis

Liverpolitis, I am often guilty of being M’cr centric. It’s a city that has been both lucky and good to me. I have visited Liverpool in the 90’s with a car full of Hull lads and we were always treated great, no grief. Unfortunately it was always a quick visit in the night so I never got to explore the city center except on one occasion I had an appointment at the passport office (is this still in Liverpool?). All the Intel agencies all have both feet in M’cr so this latest construct is naturally placed at the centre of said Intel agencies. I don’t think it will stop there. I think it’s entirely feasible for a big (30%)of the foreign office to locate within M’cr, it makes sense as these agencies are interactive and in no way takes anything away from Liverpool. The focus should be on the port (trans Atlantic passenger terminal?). Also expand capacity. New dedicated cargo track >>Salford >>Stockport >>Sheffield >>Immingham >>Europe, Scandinavia, Russia. So for Liverpool,, import/export. We just got a trade deal with Morocco but thus far it only conserns one port on the South Coast so we come back to ‘levelling up’ Liverpool should be handling cargo (lots of cargo) from Casablanca and Port~Med (Tangier). That’s where lots of our fruit and veg and flowers and wheat, spices ie, saffron. is going to come from. In my opinion this deal is vital and its only fair that a northern port has a slice.

By Robert Fuller

The Tories are quite brazen in terms of allocating the prizes to parts of the country that suit their politics, and where they don’t its where there’s a self-evidently strong cluster of capability like digital skills in Manchester. Don’t see that changing any time soon, and the only strategy that works independent of central government is to build on your strengths and try to get really good at something. You see sour grapes about Manchester a lot on PNW, but with strong leadership its done a good job of re-positioning its economic base over the years, and has always been able to tell a persuasive strategic story to Whitehall and Westminster when the wallet has been open. The NorthWest needs a strong Liverpool, and you hope it can get some better leadership to take it forward.

By Rich X

What Liverpolitis overlooks is the fact that civil service employment in Liverpool forms a far greater proportion of its job market than any other major city. Huge numbers of jobs have been located there over the last 30-40 years. The lament about loss of banking and financial services jobs in Liverpool is simply a reflection of the declining importance of the British Empire which underpinned Liverpool’s economy for so long. The city never fully restructured its economy to take advantage of new industries and global free trade which supplanted mercantilism and colonialism as trading partners and sources of income. That’s despite the government locating manufacturing plants there (JLR, Vauxhall and the link) during the 60s, 70s and 80s and upgrading merseyrail as the city became the main beneficiary of regional policy in that period. Further restructuring took place in the last 10-20 years as government poured money into the cultural institutions at Albert Dock and Liverpool is now a first class tourist destination but the fact that even subsidised office space at Mann Island struggled to let underlines the structural weakness in Liverpool’s economy despite government allocating jobs and money to the city to help in this process.

In summary you can say that Liverpool has made great strides and remains a great place to live and work but has a long way to go yet. Rooting out dysfunction elements in local government is a critical step.

By Awayo

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