What impact will No10 North have on the Manchester office market?
Expect rising rents, an increase in take-up, and growing investor appetite as Prime Minister Andy Burnham transforms the city into the country’s second seat of power.
Burnham’s move to create a No10 North will see an already hot market get only hotter, according to agents and investors.
What is No10 North?
No10 North is one of Burnham’s flagship policies, a move to bring the government’s devolution and local economic growth work out of London.
Sam Lister is the director-general for No10 North, with Greater Manchester chief executive Caroline Simpson due to be Burnham’s deputy chief of staff.
No10 North is understood to have set up, temporarily, at the Manchester City Council-owned Heron House on Albert Square, already home to a GCHQ outpost. Passersby can already see a handful of Greater Manchester police officers stationed outside and patrolling the perimeter.
The future home of No10 North is set for the Government Property Agency’s Manchester Digital Campus in Ancoats, a 900,000 sq ft behemoth off Great Ancoats Street that is in the early phases of construction. The building is due to complete in 2032.
A hot market
Even before the news of No10 North, Manchester was seen as a prime spot for investing in commercial property.
The city’s headline rent is on track to reach nearly £60/sq ft by the end of the year, according to OBI founder and chief executive Will Lewis. That is the trajectory it was on well before Burnham opted to bring a taste of Whitehall to Albert Square.
There has, however, been an immediate interest in the city’s office market.
Joe Rigby, CBRE’s managing director for the North, has already had multiple initial conversations with national and international companies flirting with doubling their floorspace in the city. This translates to potential demands for 10,000 sq ft to 70,000 sq ft.
“These are only initial conversations,” Rigby caveated.
While Albert Square and Ancoats will no doubt be attractive, the demand is really citywide at this point in time.
“Everyone is just excited about Manchester and about what the new version of Manchester is going to look like with the new Prime Minister,” Rigby said.
Any impact from No10 North will really show itself over the next 10 years rather than over the next few weeks, he added. And, of course, some of that will depend on whether or not Burnham can lead Labour to victory in the next general election.
Lewis echoed Rigby’s thoughts around the long-term impact of No10 North.
“I think the No10 North strategy is arguably the most powerful catalyst for Manchester since the BBC relocated to MediaCity,” he said.
“I think it will supercharge confidence and it will absolutely help Manchester attract more international investors,” he continued.
“We’ve had lots of calls from overseas investors and big institutional investors as well – people who invest all over the world have been interested in this city.”
The Lincoln was acquired by Northtree Investment Management for £55m last month. Credit: PNW
The investor’s perspective
This year saw two Heron House neighbours finds new owners: Queens Court and the Lincoln, which were picked up by Seneca Property and Northtree Investment Management, respectively.
Being so close to Heron House can only be a positive, according to Seneca chief executive Jeff Morton.
Seneca has capital allocated for more acquisitions in Manchester already, with the city having presented itself as a solid investment opportunity before No10 North made headlines.
Of course, buying up a building by Albert Square and Heron House has even more appeal now. It will definitely be a core location going forward, Morton said, but he also said Spinningfields and other office districts would be appealing as well.
“This is very positive for Manchester as a city and very positive for offices,” Morton said of No10 North. “I think it will attract more businesses into the locality.”
Sandy Wilson, co-chief executive and fund manager of Northtree, said he did not expect No10 North being within a stone’s throw from the fully let Lincoln to have any impact on the building in the short term.
However, he said it was a really positive move for Manchester as a whole – building upon what was already an attractive offer.
“It was really strong already, which is why it was our first acquisition for our latest fund – we specifically did target Manchester,” he said.
“No10 North may transmit into more meaningful additional rental value growth or employment growth – but who knows? It’s more of a general slight improvement of sentiment that was already strong already.”
A return to speculative development?
While all the noises around No10 North are positive – higher rents, increased take-up – it does not mean speculative office development will make a massive return in Manchester.
The city only has one new-build speculative development under construction at the moment: Landsec’s 243,000 sq ft The Republic at Mayfield.
Support in the form of Greater Manchester Combined Authority’s £2bn Good Growth Fund is in place but has yet to materialise into shovels in the ground for projects such as HBD’s 200,000 sq ft Colloco and Relentless’s and Investec’s 450,000 sq ft Kendals revamp.
No10 North won’t solve viability challenges, but it could help indirectly, Lewis said.
“What it will do is it will generate take-up, which will help reduce supply, which will have an impact on increasing rents,” he added.
Rigby was in agreement.
To really move things along, rents will need to reach £60/sq ft, he said. It cannot just be a one-off deal or for a small bit of space either, Rigby added. There will need to be consistent, sizeable lettings at that price point.
“With inflation coming down, construction costs flattening a little bit… if the yields can come in, then I see speculative development happening,” he said.
“We still have some challenges, but we are absolutely moving n the right direction.”
Not sure what long term affects this will have as two years after an election we all know this could disappear again. However Manchester was already flying and with The Renewed Town Hall about to open as well as Albert Sq its in the right place at the right time.
By Anonymous
Expensive PR
By Dan H
Oh wow. For anyone sad enough to care, this will cement Manchester as the 2nd city. The skyscraper geeks in Brum will be livid.
By Anonymous
This may be good for Manchester, but I am afraid not for other towns and cities.
Burnham has to be careful he does not Manchester centralise too much, not just for the North but the rest of the country too!
There will be many wanting a piece of the action too!
By Just saying?
Great news for Manchester, the region and the North in general. I look forward to the investment in my City.
By Degs Donnelly
Well , that sounds good then. Hope he shares the love across the North as it’s not all about Manchester…although tbf it’s mostly about Manchester. More Civil servants in the north at the new campus in Ancoats can only be a good thing too.
By Sir Humphrey Bumphrey
So basically it will inflate an already heated office market in Manchester. May have been more of a statement of intent to base it in another part of the north?
By Anonymous
Devolution is a must if the people seek a fairer slice of the cake
By Rod
Bored of the Manchestr centrasism already. When it’s time for an election I won’t be voting for him.
By Anonymous
The impact this could have on Manchester is difficult to underestimate but how does Andy Burnham ensure No10 North is here for the long term and is not culled by the next PM for ‘cost saving’ and/or political reasons?
By Anonymous
Great news and I’m excited to see what Number 10 North and Andy does for Manchester. We need a revolution of our public transport including an underground metro, HS2 reinstated and an underground Piccadilly station with proper connections to onward places in the North/North West. Time for the North to shine!
By D
I am 100% in favour off moving some of No10 from London but I’m from Manchester but I dont think it should come here.
I think it should go to whichever place has been nominated as the worst place to live the most over the past 5 years, Bradford or Stoke, send all the toffs to live somewhere like that, now that would be interesting!
By Anonymous
@Anonymous 3:40pm
If he can improve transport connectivity across the North and move departments to Liverpool, Leeds, etc and possibly even Birmingham, with Manchester as the central hub then it might be difficult for future governments to reverse. He doesn’t have much time to get the ball rolling though!
By Anonymous
I suppose whether this is long term or not, depends on its success, or not. It might become indispensable if it works. It could result though in Manchester becoming as distant from the rest of the North, as London is from the rest of the U.K.
By Elephant
Anonymous 4.04pm ‘send all the toffs to live somewhere like Bradford or Stoke ‘ ?! This isn’t an episode of ‘The Young Ones’ ..thankfully the grownups are still in charge !
By Anonymous
It would make more sense putting the temporary operation somewhere outside the city centre that can be easily secured and has good access in and out. I don’t fancy the chaos that would be caused on roads that are often jammed through the day as the PM’s motorcade races down Lloyd Street, onto “no cars here” Deansgate and straight into backed-up traffic trying to get him home to Leigh.
The most secure building in GM must surely be the one on the industrial estate near Bury where the spooks hang out?
By Anonymous
Don’t get carried away. It should in reality make little major difference as No10 north is pure PR language and will just be a physical office for Andy to go to in an already planned for building. Otherwise, what does it even mean? Is Andy Burnham going to give somebody else the job of Northern prime minister to make decisions just for the north? No. Where exactly is the north anyway and where does it stop? Exactly.
Agents and press will no doubt push the PR further resulting in higher rents for those companies consolidating various offices in the city into one building or rlocating from one building to another for better facilities and services. In reality, departments like the MOD aren’t going to move to Manchester and nor should they. If any moves take place, they should be to Leeds, Liverpool, Sheffield etc and spread the departments around. This wierd idea that Manchester becoming better will please everybody outside the south east and solve current problems is bizarre. Giving more say over what is spent and how it is spent in each different area is another matter and exactly what’s really needed.
By Anonymous
It is a strategic error for Burnham to be nakedly favouring Manchester like this. He needs to show some interest in the country’s other cities, instead of just his own pet project.
By Anonymous
Folk do not know the No 10 North is to be the base for devolution of resources and tax to local communities across the UK. It is not moving London centralism to Manchester. Listen to what is said and written.
By Anonymous
“The belly and guts of the nation”
By Idi
Small correction, the BBC didn’t “relocate”, it was an expansion of a large and established base the BBC has had there since the 1920s.
By Anonymous
This doesn’t look good as thanks to governments of both colours Mcr has been getting preferential treatment for decades.
This will see more investment in Mcr at the expense of other cities, and the No10 outpost could easily have been located in somewhere historic like York or Durham.
By Anonymous
Manchester is already the de facto second city as seen by yet another recent government poll. This will be nothing but a PR stunt unless Labour can actually get real power shifted Northwards across the region and real power lies where the money flows. Always follow the money.
By Anonymous
More stinking jealousy. Please read the article. There will be a base in Manchester. Other cities will benefit.
If you want to be in the same position, you have to be willing to do the things which Manchester has done.
By Anonymous
Not just Greater Manchester but all round the UK is everything because public taxpayer for everything because land of UK authority is everything. 👍🏻
By G J Kitchener
Nothing – Burnham will be out at the end of the decade and everything moves back south
By Anonymous
This is just PR at best and a complete waste of tax payers money at worst. We don’t need any of this or devolution, we just need an honest government in Whitehall.
By Anonymous
What the country needs. It’s important to get real power and money devolved even before the new campus opens in 2032. This bit is just the window dressing, I don’t think people realise what’s been happening in the background and the fact that despite appearances this hasn’t just happened.
By Anonymous