Summer Holiday Romance: Why Everyone Suddenly Hearts Manchester's Business Parks (And Will It Last?)
Who doesn't love a holiday romance? But as the summer beckons, and love blooms, is the sudden growth of interest in Airport City and the South Manchester business parks just a seasonal fling?
Can love really blossom, and the out-of-town markets come back into their own after a decade in which the city centre has had it all its own (wicked) way?
Ah, the sun, the surf, the white floaty impractical clothes which make it impossible to carry a wallet or phone... the season of the holiday romance has arrived. Only this year Manchester Airport - the starting point for many jolly August flings - is itself feeling the summer love burn.
Last week it emerged that The Hut Group — the online empire that embraces wesites from Zavvi to MyProtein — was to take 250K SF at Airport City as part of a campus-style consolidation, Estates Gazette reported.
The move followed The Hut's decision to take 51K SF at Airport City in a deal agreed in May. They agreed to take 27K SF on a 10-year lease at the 96K SF 4M building next to the airport railway station, and another 24K SF at the Voyager office building, this time with a five-year lease. At the time the deal was said to be the largest yet at MAG Property's Airport City portfolio: eight weeks later The Hut has broken that record.
The deal comes as other occupiers circle the airport, not the least of them GCHQ, tipped to take a large secure campus site close to the international air hub
New Occupiers Are Coming
The Airport City projet has moved off the drawing board and onto the ground. The completion of the first part of a new £15M link road which will help to unlock the future development plots across Airport City North is a very visible sign of change.
The data suggests that the 5M SF scheme is being lifted by a tide of new demand in south Manchester. Manchester Office Agents Forum figures, published in April, showed South Manchester first quarter 2018 take-up rising 27% on the same period in 2017.
This followed a similar (slightly more modest) uplift in the final quarter of 2017: South Manchester business parks reported a strong year, up 17% on 2016 with 641K SF, an increase on the previous three consecutive years and once again above the 10-year average. In the second half of 2017, larger transactions including Laing O’Rourke, Biz Space and Assetz Capital ensured that it was a strong finish to the year.
Meanwhile, the occupier profile is shifting and expanding, with flexible office providers beginning to make their presence felt: a sign that a dynamic user-base is looking at south Manchester. Last week it was announced Pure Offices is to bring its national serviced office operations to Manchester following the off-market acquisition of 3400 Lakeside, Cheadle Royal Business Park, by Carrick Real Estate.
Acquired from Target Real Estate, the deal marks the operator’s twenty-first serviced office. They plan a comprehensive £1.9M fit out of the 36K SF, three-storey office building at the prominent south Manchester business park, which is due to be completed this autumn.
New Roads Will Help
So can the South Manchester business parks in general — and Airport City in particular — be expected to see further growth?
Speculation that the airport could be the focus for a post-Brexit free port — floated in a report by construction consultancy Mace, and welcomed by city council leader Sir Richard Leese — could help maintain momentum.
Continued passenger growth at the airport will also create an uplift. Last week Manchester Airport announced passenger numbers up 6.5% to 27.9M, and revenue up 9.8% to £814.3M.
Infrastructure improvements will add to the area's appeal. The long-awaited Manchester Airport relief road is now under construction and due to complete later this year. There are longer-term plans, too. Whilst the South East Manchester Multi-Modal Strategy is more about relieving pressure on existing commuter routes than on big ticket new highways, it could include new tram and rail connections, improvements to the A34 and A6 connecting the business parks to the city centre and suburban housing, and improved integration of transport and planning. All of this is worth having: a consultation on a draft prepared by Atkins, is now underway.
Perhaps most important of all, South Manchester is also sure to benefit from the natural swing of the property pendulum: it now looks relatively cheap compared to the city centre, and Economic 101 suggests that a lower-priced location will inevitably draw occupiers for whom the marginal savings matter. Not everyone is enamoured of city centre life — or has the time to commute into it — and south Manchester's business hinterland is large.
