Schroders eyes Manchester opportunities as take-up grows
INVESTMENT managers at Schroders are looking for other opportunities in Manchester months after agreeing a £132m deal for Bruntwood’s City Tower.
The group’s Tom Newman, who manages a portfolio of office investments including City Tower, told TheBusinessDesk.com they were keen to benefit from increasing confidence in the occupational market, particularly in Manchester.
“We think it’s the one city that stands apart from the rest,” he said. “There are opportunities in Leeds but we haven’t believed the rental growth story at the moment.
“In Manchester we’re seeing inward investment from London and also from abroad. London is saturated, there’s not enough space and it’s hugely expensive. In the occupational market sentiment has picked up in line with the investment market. Manchester has been an example of a regional city where occupational sentiment has really started to grow.”
So far this year take-up stands at around 800,000 sq ft, already double the total figure for 2013, driven by inward investors such as Ford, Autotrader and Towergate Insurance. Top rents are also rising with recent lettings in Spinningfields returning to a pre-recession peak of £32/sq ft. At City Tower rents vary from £18-30/sq ft depending on the floor.
Mr Newman added: “We have money in the funds to spend if there are other opportunities to go at. We like to move buildings on either through refurbishment or regeneration opportunities. We’re not just looking at Manchester, also Leeds and Birmingham. It’s all about the right opportunities and Manchester at the moment is the stand out regional city.”
When Schroders acquired Manchester’s City Tower in May it took on a three-acre chunk of the city centre. The deal includes the high profile 30-storey tower which has around 225,000 sq ft, a 185-bed hotel, and the 80,000 sq ft 2 New York Street, as well as 22 retail units.
The complex, formerly Piccadilly Plaza, stretches from Mosley Street to Portland Street and has a total of 615,000 sq ft. The tower is almost fully let with just two vacant floors. Tenants include Indian outsourcing firm Aegis, recruitment specialist Hays, and Bruntwood also has its headquarters there, and will continue to manage the building.
Bruntwood has left the block in good shape but Schroders is planning to make further improvements to the offices, and particularly the retail areas on the Piccadilly Gardens side.
Mr Newman said: “What Bruntwood has done on New York Street is great and we feel, in order to enhance the office offering, that the retail on Piccadilly Gardens could and should be improved. But improvements will depend on what happens in Piccadilly Gardens.”
The state of Piccadilly Gardens has sparked great debate in recent months, with campaigners calling for the grey, concrete “Berlin Wall” to be greened up, and others complaining about the poor state of the lawns and benches. The council has responded by sprucing the area up and one idea is to move part of the bus station to Chorlton Street.
“It’s all about getting the right customers in the door. We’d like to have more of the New York Street style on the Piccadilly side but this is a long term strategy,” said Mr Newman.
