The Subplot | Hen and stag parties, office investment

Welcome to The Subplot, your regular slice of commentary on the business and property market from across the North of England and North Wales.

THIS WEEK

• Hen and stag parties: could control zones work in Northern cities?
• Elevator pitch: your weekly rundown of who is going up, and who is heading the other way

PARTY TOWNS

Hen and stag parties will be hard to control

Could control zones limit the noise and nuisance of hen and stag parties in York, Newcastle, and Liverpool? Or is this just talk?

There’s a lot of anger about hen and stag parties in York. Local MP Rachael Maskell has called for “European-style” control zones to limit the nuisance. Gateshead-based hen and stag business Last Night of Freedom hit back, and Maskell counter-blasted. The latest blow, delivered on Sunday, included the suggestion the city smells of wee. It’s excellent entertainment, like watching a scrap after last orders.

Destination Liverpool

Meanwhile in Liverpool another fight begins. Augur Group has lodged plans with Liverpool City Council to designate 68,000 sq ft of the 400,000 sq ft former Lewis’s department store for fun: brewery and restaurant, escape rooms, and mini golf. Judging by comments on Place North West, any hint that this is catering to the city’s booming hen-and-stag party trade will cause plenty of agro. So what’s at stake?

Money spinner

Party trips are big business. York, Liverpool, and Newcastle regularly top the UK destination league tables. Aviva calculates that the average per person spend for UK-based parties is £920 for stags and £652 for hens. This seriously matters to city centre economies where more than half gets spent on accommodation, food, drink, and entertainment. While Liverpool City Region’s Growth Platform didn’t share an exact breakdown of economic input, a large slice of the 3.1m annual overnight stays are party-related. Likewise, the city’s £3.6bn visitor economy.

Not fun

Yet hen and stag parties aren’t everyone’s cup of tea – plenty of participants hate them, so local residents can’t really be blamed for feeling likewise. Maskell wants to limit the nuisance to the area around York railway station as part of what she has been reported as calling a European-style control zone. For similar reasons – disciplining a sprawling hospitality sector – she wants to curb the right to operate Airbnbs. Regulation of short-term holiday lets is already coming in Wales.

The case against

“Every location is different. In a compact city like York, families are soon squeezed out by party groups. We need cities to work for everyone, to be safe and welcoming and by having areas which are family-friendly and others where the night-time economy is based, enables greater freedom and better stewardship,” Maskell tells Subplot.

“Many of these party groups then return back to residential streets and continue their revelry there through the night at their Airbnb when others are trying to sleep, disrupting neighbourhoods, and creating community stress. Limiting the quantity of Airbnbs will not only enable residential areas to return to their original purpose, but it will start to address the serious housing needs across our city.”

Be kind

York City Council’s response (so far) is a weblink to a list of things it would be nice for visiting groups to do. Sub-headings include “Let’s be safe…Let’s be considerate” and “Have a great time in York.” It includes the advice: “Remember that bars and pubs in the city sit alongside family attractions and people’s homes.” No hint of zones or bans. Subplot was awaiting further comment from the city as the newsletter shipped.

Nobody does this

Are there European-style control zones York could copy? Short answer: no. Long answer: Amsterdam isn’t really doing anything except heavy tutting. The official policy is “discouragement” of rowdy visitors, combined with more visible policing, and restricting opening hours in cafes and De Wallen, which is already regulated. Talk of limiting or banning pub crawls in the city is just talk.

In Tallinn it’s much the same, with the downside that the pedal-powered beer buses popular in UK party cities aren’t legal and nor are fake kidnaps. If your country was next to mafia-run Russia you’d understand why. Beer bikes are also illegal in Prague, and, while there are no zones, some landlords make it quite clear they don’t want stag parties in their bar. It looks like there is no “European model” of control zones for UK cities to replicate – if you know better, comments welcome.

Blackpool’s lesson

There’s also the Blackpool Mankini Incident to consider. It is a powerful lesson in how hard it is to control visiting groups. In 2014, the BBC reported that censorious local councillors wanted to ban the mankini, a fetching and skimpy item of summer menswear. The use of a Public Space Protection Order was mooted, as part of wider efforts to control rowdy groups. But as the guidance makes clear, that’s not really what these orders can do, and the 2021 version of the order doesn’t try to do it. It bans disposing of glass bottles on the beach, card games, and chuggers – it doesn’t get anywhere near controlling hen and stag parties.

ELEVATOR PITCH

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

In theory, this is a good time to buy 20-30-year-old Northern offices. In practice, this is what investors are doing. Everyone get on board, this elevator is going up.

Office investment

Bad news for London isn’t necessarily bad news for the North, Part 978. Data last week from BNP Paribas Real Estate showed a collapse in UK commercial real estate investment. The first half of 2023 saw £18.5bn spent, compared to £38.5bn in the same period last year. The firm expects total volumes to reach £41bn by December, down a third on 2022 and the long-run average. By 2024, the figure will tick back up to £47bn but it’s still way off trend.

The silver linings are many and varied. Beds and sheds are still in demand and the North has lots of opportunities to buy into both. Data centres too, retail parks if they are top notch. But Northern offices, the big casualty of the stomach-churning devaluation of the past three years? Them too, says BNP PRE’s Hugh White.

“Now is absolutely the moment for offices of a certain age outside London,” he says, pointing to the Brindley Place city centre office campus sale in Birmingham this week. “This transacted at 52% what the owners paid in 2017, and 35% below their guide price last Christmas,” he tells Subplot. The relevant valuations are £260m, £195m, and the latest sale price £125m.

“Valuations on these offices [roughly 20 years old] are down a half from their 2022 peak. These are the opportunities that investors with billions won’t see because they can’t get down to the granular office, but if you’re closer, you can have a whale of a time,” White says. New owners feel they have lots of angles. “They can get middle-ish income off attractive yields, and can either paper over the cracks and see what happens, empty the block and upgrade, or convert to alternative use like residential rental,” he observes.

Actually buying offices

As if by magic, three deals that prove the point. German investor AM Alpha – owner of what used to be Manchester’s Debenhams – snapped up 196 Deansgate. The 63,000 sq ft block changed hands for something north of £20m, according to Place North West, a hefty discount on the £30m owner Commercial Estates Group was seeking in June 2022.

Value destruction hasn’t been quite so intense at BT’s 139,000 sq ft Leeds office, One Sovereign Street. Last week it sold to Citi Private Bank for £38.5m, Place Yorkshire reported. This is a shade down on the £40m asking price in June, and more seriously down on Savills’ £48.9m asking price in June 2018.

The sale of 11,700 sq ft Onward Buildings at 205-209 Deansgate in Manchester, is harder to judge because the block hasn’t changed hands since the 1980s. Leisure income from the ground floor will limit the valuation damage, on the other hand 4,700 sq ft is vacant. Agha Group, the new Levenshulme-based owner, plans to refurbish it as flexible workspace.