Moving or flexing? Is the Co-op ready to fly the coop? If it really does leave its Corporation Street HQ, which lucky site will gain the prestige of being its new home – and its thousands of jobs?
It is the Holy Grail of office requirements as far as Greater Manchester is concerned. The Co-operative Group, one of central Manchester’s most historic businesses, is seeking a 250,000 sq ft headquarters by 2010, and is in the process of hunting for one across the conurbation.
The move is intended to escape the spiralling costs of its existing Corporation Street offices, which are expected to rise to £100m in the next 10 years. The brief is for 200,000 sq ft of space for 3,000 staff, with 50,000 sq ft of expansion space.
The Co-op, as well as its adviser Jones Lang LaSalle, is keeping its lips tightly sealed on the subject.
EG revealed earlier this year that the Co-op considered an initial 50 sites (News, 2 February, p36). A top-secret shortlist of eight prime Greater Manchester sites has since been selected, from which the occupier will make a selection by the summer.
Local list
EG understands that two of local developer Ask Developments’ schemes – in Salford and Bury – are on the list, along with Wilson Bowden’s Kingsway in Rochdale, Langtree’s Hollinwood in Oldham and Muse and Stayley’s Ashton Moss.
Two city-centre options – Allied London’s Spinningfields and Muse’s Victoria Station regeneration – also feature (see panel, p128).
In casting its net so wide, the Co-op has shone a searchlight on exactly where Greater Manchester’s prime office development is poised to happen. It shows that towns which, until a few years ago, would have been considered decidedly off pitch are now realistically competing with the city centre.
After the BBC’s decision in 2007 to move to Salford Quays rather than central Manchester, the city council will be working hard to retain the Co-op.
“The city won’t want to see the Co-op leave, but it will have to consider a raft of issues including costs, staff availability and public transport,” says King Sturge partner Chris Mulcahy.
Some even believe that the compiling of a shortlist is a ruse, with the Co-op seeking “leverage” for a major redevelopment of its Corporation Street site, with itself as the anchor tenant. The Co-op admits that this option remains on the table.
Off the record, one agent suggests that if the Co-op does relocate out of town, the city’s planners might retaliate by looking unfavourably on a major revamp of its existing buildings. He explains: “The Co-op has significant and valuable holdings and will need to seek planning consent from the council.”
Sensitive requirement
Such is the sensitivity of the requirement that few are prepared to speak out. The city council is keeping quiet on the issue, with a statement from chief executive Howard Bernstein saying merely: “We are working hard to ensure that the Co-op remains within the city centre.”
Throughout Greater Manchester, however, the Co-op’s requirement has caused something of a storm among local authorities eager for what would be an influx of thousands of jobs. John Hudson, chief executive of Rochdale Development Agency, admits that his is likely to be one of many local boroughs courting the requirement.
“We put forward proposals, along with the rest of Greater Manchester,” he says. “At Kingsway, we have more than one site opportunity for a requirement of that magnitude, be it the Co-op or another, so we can put a serious proposition forward.”
Plenty of developers on the shortlist have major schemes, but no prelets with which to kickstart development, meaning that the Co-op could be make or break for some.
Peter Skelton, head of Lambert Smith Hampton’s Manchester office, says: “None of these schemes would be speculatively built without such a prelet. In some of these towns, the size of this requirement is worth a year’s take-up and – with the cost of money, the volatility of interest rates, lengthening of yields and with rates on empty buildings being introduced – developers will be reluctant to start speculatively.”
But the requirement does highlight the fact that the region’s towns are increasingly being seen as viable office locations. Rents are found in the mid to high teens, with Orbit, for example, achieving £15.50 per sq ft at Middlebrook in Bolton. Given the rents of £28-£30 per sq ft in central Manchester’s grade A schemes, there is a significant saving to be made.
Transport links
Skelton also argues that transport links to towns in north Manchester are improving. He says: “The opening of the M60 extension was a strong driver to bringing forward sites and, by 2011-2012, towns like Rochdale and Oldham will have the Metro tram extension.”
The appearance of towns such as Rochdale, Bolton and Oldham on the Co-op’s shortlist also suggests that the market’s attention is increasingly moving away from the traditional office sector of the south Manchester crescent. According to Cushman & Wakefield, around 120,000 sq ft of grade A product is available at the airport area alone.
Although the Co-op’s search remains shrouded in secrecy, it does illuminate the state of the Greater Manchester office market. Plenty of developers have plans, which the Co-op could make a reality. This summer, the owners of at least seven such schemes will be very disappointed.
Market at a glance
Bolton, Bury, Rochdale and Oldham command rents between £14 per sq ft and £15.50 per sq ft
There is 650,000 sq ft planned or under construction in Bolton, with 540,000 sq ft planned for Rochdale
Salford Quays’ rents now headline at £20 per sq ft, with 90,000 sq ft available. There is 368,000 sq ft under construction, including HBG’s 70,000 sq ft Metro at Exchange Quay
Aston-under-Lyne’s headline rents are £16 per sq ft
In south Manchester, there is more than 120,000 sq ft available around the airport, with only 22,000 sq ft being built. There is nearly 167,000 sq ft under construction in Altrincham, with rents at £20 per sq ft
Stockport and Sale’s top rents are £15.50 per sq ft and £16.95 per sq ft respectively. There is nearly 100,000 sq ft available in Sale
Source: Cushman & Wakefield
The schemes on Co-op’s shopping list
Estates Gazette understands the Co-op has shortlisted eight schemes for its 250,000 sq ft requirement, including:
? Spinningfields, central Manchester: Allied London’s mixed-use development is one of two city-centre options.
? Victoria Station, central Manchester: Muse and Morley Fund Management’s proposed £350m, 800,000 sq ft mixed-use revamp of the station area.
? Exchange Greengate, Salford: The first 1.5m sq ft phase of Ask’s 3.3m sq ft project won consent in June.l Townside, Bury Ask’s and Bury council’s 350,000 sq ft scheme, next to the town hall.
? Kingsway, Rochdale: Wilson Bowden’s proposed 420-acre business park is tipped by some as the sentimental choice for Co-op; the global co-operative movement was established in Rochdale in 1853.
? Hollinwood, Oldham: Langtree was selected by Oldham council last year to deliver 100,000 sq ft at the first two phases of a scheme, which could take 10-15 years.
? Ashton Moss, Ashton-under-Lyne: Muse and Stayley’s scheme has already secured 100,000 sq ft for Greater Manchester Police Authority.
