The Subplot

The Subplot | L&G, leisure property, Manchester offices

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


  • Legal & General plots a new path in urban regeneration. Wes Erlam explains what is coming next
  • Time to revalue your leisure property assets? New data suggests it is
  • A Manchester Victoria office deal reveals the new normal

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Wes Erlam L&GLegal & General plots new course

It is three months since Wes Erlam took over as director of urban regeneration at Legal & General Capital. As L&G plots a new role in the “levelling up” agenda, and deepens its partnerships with Bruntwood and the University of Manchester, Erlam’s national remit potentially gives the region a friend in high places. What will he do?
A big regeneration rethink is looming at Legal & General Capital, and Wes Erlam is the man leading it. A former development director at Salford-based Muse Developments, and more recently managing director of Muse’s uncle (or cousin?) Morgan Sindall Investments, Erlam arrives with plenty of local and national experience. What are the new targets in L&G’s crosshairs?

Busy boy

You really need to see an organogram of fund manager L&G’s empire to work out what Erlam is there for. His directorate is within L&G Capital, the side of the business that creates assets to feed its own and others’ retirement portfolios. The official summary says it is an “alternative asset platform, creating assets for Legal & General Retirement and third party clients in order to achieve improved risk-adjusted returns for our shareholders”.

The ‘A’ list

His role includes overseeing L&G’s involvement in Bruntwood SciTech, the partnership picked to deliver the planned £1.5bn ID Manchester mixed-use scheme; the English Cities Fund in which Muse is development partner; and 16 other major city regeneration schemes across the UK. Assets under management total £700m, but the gross development value will be many, many times more. What connects those projects is an interest in education, science occupiers and a long-term effort to lift local values.

ID issues

The 18-acre ID Manchester is L&G Capital’s most recent investment and, in the long term, one of its most significant. This joint venture between Bruntwood and Legal & General was chosen by the university in May. The project is expected to yield 4m sq ft of development including 2.6m sq ft of offices over around 15 years. “The ID site is probably the largest part of the central Manchester jigsaw left, joining up the city from Mayfield to Circle Square, so it was undoubtedly an opportunity,” says Erlam. A business plan and legal documentation are now being drawn up. Decisions on phasing will come soon.

SciTech, too

Bruntwood SciTech is also part of Erlam’s parish. Created in 2018, the JV is well established and has its own management structure (and attendant L&G team). Erlam stands a little back and is more like a shareholder. But that does not imply a lack of involvement. “Given my location bias, and local knowledge, I’m quite keen to stay close to the detail,” he says.

Wider picture

This story isn’t all about Manchester. In fact, L&G Capital is now so heavily committed in the city that Erlam is doubtful it has an appetite for more. New proposals would be “heavily scrutinised” in case of overexposure, he says. For the next steps – and L&G’s plans to advance the government’s Levelling Up agenda – look elsewhere. The business is involved in 16 partnerships, invariably the ambitious kind, in cities from Bristol and Oxford to Newcastle and Sheffield. Partners include local councils, government and universities.

Liverpool calling

A map of L&G Capital’s involvements reveals two gaps: the Midlands and Liverpool. Other arms of the L&G empire are, of course, also active in Liverpool, and Bruntwood SciTech has Liverpool Science Park, but there could still be more scope for Erlam’s development team. Watch this space. Also, watch the Midlands.

India BuildingsLevelling up is a wave L&G Capital wants to ride, following LGIM Real Assets, which has already partnered with the Government Property Unit in a string of major city centre office consolidations (including 270,000 sq ft at Liverpool’s India Buildings). “Levelling up and building back better is something the business is incredibly passionate about,” says Erlam.


“We are prepared to disrupt the market in ways other funds aren’t – for instance, investing in modular housebuilding and affordable housing.” The latter is particularly interesting and represents a new, perhaps significant, direction of travel. In July, L&G Capital became one of the first big funds to step into affordable housing as part of a £1bn development in Sussex. This will start with 200 low-cost homes for rent. Other investors like the idea of affordable housing (a new twist on the beds-for-rent narrative) and will follow suit. This is a sector worth watching.

Fresh blood

“The appetite for new opportunities is definitely there,” Erlam says. “We’re open-minded about conversations with local councils to see if their objectives can align with ours. Sometimes of course it won’t work for them, or for us, but the business has a track record of delivery and some great examples of partnership, so I’m optimistic.” Above all, the fund manager’s involvement has to yield some kind of wider uplift to the local market. “The question we ask is, ‘Can we genuinely impact on outcomes?'” he says.

Reviewing the position

“The regeneration function has gone through a significant growth phase,” Erlam continues. “And where we go next is something I’m currently looking at and we’re talking about this in L&G Capital. We’re asking where those opportunities are, and where we are best concentrating our efforts. We’re looking for things that suit our agenda about high-quality outcomes across society. It’s about where we can add impact, and where our intervention produces outcomes that might not otherwise be secured.”

Fun times

In the property business, Erlam is said to exude a strong, Gareth Southgate-style, Responsible Dad vibe. This is the ideal temperament for a job that involves carefully selecting long-term opportunities and having the patience, and confidence, to wait for the returns.  Asked if he’s having fun, Erlam (wearing a chunky cardigan the day he spoke to Subplot) seems at first blindsided by the idea of having to commit himself to something so frivolous. But then he relents. “I’m just three months in but I love it,” he says. “This job is natural to me with the mixed-use regeneration and partnerships. And yes, it’s great fun.”

Conclusion: You’re going to be having a lot more fun with L&G, and Erlam, in the years to come.


The lost summer of 2021: will staycations work?

New data show the Liverpool City Region and Greater Manchester tourism sectors have taken a combined £9bn hit.

Pre-Covid, tourism was worth £9bn to the Greater Manchester economy, supporting more than 100,000 full time jobs. Seventy per cent of that value is estimated to have been lost since the pandemic began, representing a £6bn loss to the economy, according to Marketing Manchester. Data from Liverpool City Region, supplied by the LCR Growth Platform, shows a marginally less serious but still eye-watering collapse: 58% of the £4.9bn turnover tourism sector has vanished, it reckons. Inbound visits plunged by 73%, inbound visitor spend by 79% and hotel occupancy was down 51%. You can find the full, grim picture, here. Will the spending return?

The bad news

The only hope is the deflection of domestic outward international travel back into UK domestic tourism: in other words, widespread staycations. Research published last week by Oxford Economics suggests that domestic inbound tourism is recovering slowly: the current trend is about 45% down on OE’s base predictions for 2021. Researchers expect 2022 to be slower, too, though only by about 20% on their base projection, thanks to continued travel disruption. This isn’t good news. But there is a glimmer of hope elsewhere in the data.

The slightly less bad news

The upside is that regions with tourism sectors balanced between inbound and domestic don’t come out of this as badly as those with relatively little domestic tourism but hordes of visitors from overseas (think Cyprus, Malta). The UK is more or less middle of the table. Summer 2021 may be 15% down on the baseline for visitor nights (Ireland and Austria are down 30%, Germany could actually go up). It’s not much to cling onto, particularly if UK outbound air travel grows at the expense of staycations in the wake of the abolition of amber list restrictions, but it’s something. The trouble is, it may not be enough to stop residual optimism draining away from buyers and vendors, and thus to stop a correction in 2022 leisure property valuations.


New Victoria Office Building, Muse Developments And Morgan Capital, P MuseManchester’s new normal

Morgan Capital Partners acquired a site on Corporation Street with consent for a 150,000 sq ft office development. The deal tells you everything about the kinds of new entrants to expect in Manchester’s office scene – and its largely international future.

Late last month, Muse Developments sold the site earmarked for a 150,000 sq ft office block to London-based asset management and development platform Morgan Capital Partners. Morgan, which channels long-term international money into UK real estate, has been hyperactive in London offices but this is its first beyond the capital’s Zone 3 – so it’s a big moment. The new owner will build it alone, Muse is off the job.

We took the call

Morgan made an approach to Muse, which speaks volumes about international capital’s enthusiasm for Manchester. Muse, via the English Cities Fund, is already moving swiftly ahead with plans for the 113,000 sq ft A3 building at New Bailey and it would, inevitably, have been a few years before the New Victoria office rose to the top of the pile. Morgan can move quicker, and Muse’s £130m funding deal with Pension Insurance Corporation was for the build-to-rent element only. So a deal makes sense if you want to see New Victoria keep moving. A site like this might change hands for £7m-£8m, meaning more newcomers get a slice of the Manchester action, and everyone is happy.

The Subplot is brought to you in association with Cratus and Bruntwood Works.

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