The council has a plan for development, the cultural scene is building, and student numbers have quadrupled. But is Chester’s economy growing at the pace the city needs?
Lloyds Bank would be mad to close MBNA’s Chester mega-hub following its £1.9bn acquisition of the credit card business. So say Chester locals. But mad things can happen – the annus mirabilis 2016 proved it – and if it did, this one could deliver exactly kind of chill Chester’s economy doesn’t need.
Regulators are now assessing the deal. MBNA say Lloyds are “very much keeping” the MBNA brand and operation but if the worst happens, and 1,700 jobs are at risk, the task of defending Chester’s progress falls to Cheshire West & Chester Council.
Longer term, the council’s answer is the One City Plan, first published in 2012 by a Conservative council but now being pushed by a Labour administration. The plan is already delivering. Kicking the long-stalled Northgate shopping development back into deliverable shape and augmenting the city’s thin cultural offer with the new £37m Storyhouse cultural hub have been widely applauded. Muse’s work on the 70,000 sq ft One City Place office development is the most conspicuous sign that something is changing for the better.
But is it enough?
Office development in Chester still struggles to reach viable rents outside of some key locations (£18.50 per sq ft is the peak) and the city’s poor road and rail links to Manchester inhibit growth. A lack of grow-on space for SMEs, a limited conference market, not enough city residential to create the big city buzz… the list of gripes goes on. Is the One City Plan in danger of turning into the One Last Chance plan?
Locals sincerely hope not, and they point to encouraging signs of Chester’s economic rebirth. But they do not minimise the problems of fact and perception. Look at MBNA’s relocation, they say, as proof that the city has appeal. But the 350,000 sq ft deal at Chester business park dates back to 1993. That a 24-year-old win is still being talked about is, they concede, a sign that things aren’t moving fast enough. Chester is stuck in the past in more ways than one.
Will Sadler, director at Legat Owen, says: “There’s a challenge over MBNA’s future. They are a major occupier, but Chester isn’t a one-trick pony. We do have other financial services occupiers – and the business parks are considered in national searches.”
He adds: “City centre rents need to be higher to attract speculative development, and we need a proper serviced offer or incubator offer to cater for the growing five- to six-person business. I don’t buy into the idea that many will emigrate to Manchester or Liverpool to do their growing, but they do head out of town. And we need them to stay.”
Sadler bemoans the poor links to Manchester. “The M56 is chocka, and the trains are in the stone-age,” he says of a journey that sometimes takes 90 minutes to travel 30 miles. “Chester has a strong financial services offer, but the connections with Manchester need to be improved,” he says.
Chester resident Ed Rooney, development director at Savills, is one of those condemned to the daily commute to Manchester. He says: “Transport is the issue if Chester is to be to Manchester as York is to Leeds – or Cambridge to London.”
Muse director Phil Mayall agrees Chester needs more grown-on space for SMEs. City Place’s 70,000 sq ft first phase is now more than 50% let, and overwhelmed with enquiries for smaller suites.
He says: “Chester’s university is now finding its purpose, a lot of graduates are emerging and whilst we’ve got an incredible tech park and the Riverside innovation centre we need something in the middle for small businesses not ready for big overheads. Nobody has those kind of suites on offer. Whoever provides that will be bowled over by demand.”
No surprise, then, that this is exactly what’s envisaged for the next phase of City Place: a 30-40,000 sq ft scheme, maybe backed by the local growth deal, could be coming soon. The Chester Growth Partnership says it recognises the need for grow-on space but council leader Samantha Dixon doesn’t sound encouraging. “We have a dialogue with Muse,” she says, “but there are opportunities elsewhere in area which we support.” This means low-cost office space in places like Ellesmere Port.
Muse may have to push a little harder. “The problem maybe that Chester just hasn’t shouted loud enough about its commerce, and shouted instead about its history,” says Mayall. However, he hopes the city has now reached a tipping point, both on commercially-viable office rents and its self-image.
The Chester Growth Partnership, chaired by developer Glenbrook’s Guy Butler, says if Chester could attain Warrington’s levels of economic growth, “the city would be in a good place”.
“The risk is leadership,” he says. Whilst praising current council leader Dixon, Butler says the council has a habit of switching political control, which can slow things down. “The city needs educating on what development can do, in the way that Bernstein in Manchester and Joe Anderson in Liverpool have already done,” he says.
Resolving the rail and road problems could be difficult, however, the Growth Track 360 plan would improve links between the North West and to the Irish Sea ports. The prime minister has taken an interest and the feeling is good. Lobbying is also under way to create links to HS2’s stop at Crewe.
In the meantime, it would be good to see more city centre residential after a period in which student accommodation has dominated the city centre market. Neptune’s sale of the 65-apartment Shot Tower site – derelict for 20 years – will be a test of appetite for contemporary city residential. Whitecroft Homes is the developer.
The council’s Dixon says the city is “adjusting” to the 400% increase in the student population in the last 10 years. More city centre residential is envisaged (“It wasn’t viable a few years ago and it is viable now,” she says). The Northgate plan is taking shape. Above all Dixon is lobbying hard on rail improvements. “If we could achieve the 360-plan, it could open the door to a huge economic transformation.”
Out of town
More Chester business park development could be on the way. Chester Parkside has applied for outline consent for a 111,400 sq ft scheme on a 9.4-acre plot including the Parkside 1 site already being marketed. Will Sadler, director at Legat Owen, says: “This will not be speculative, but we are marketing it at £290 per sq ft capital value, so gap funding wouldn’t be required.”
Northgate
The long-becalmed £300m Northgate retail scheme is now triumphantly back in business thanks to innovative council intervention (it bought out ING’s interest in 2013) and a 100,000 sq ft prelet to House of Fraser, a 167-bedroom Crowne Plaza hotel, a conference centre, and a six-screen Picturehouse cinema. The final stages of land assembly could see a CPO confirmed by spring 2018, with work on site beginning in phases from late 2018 to 2020.
David Lewis, chief executive at Rivington Land, development manager for Cheshire West & Chester Council, says the council has already dealt with the expensive obstacles to development that slowed the private sector – and is much less likely to be scared off by shifting returns or economic headwinds.
“The developer is, in essence, the council. It has already invested £100m, and as a result we already have the new theatre and bus station, both parts of the scheme ING promoted. And of course the council’s motivation is slightly different from a commercial developer.”
Lewis adds: “We’re now actively on the prelet trail. Headline rents will be around £200 zone A.”
