Why Deloitte Taking 35K SF From WeWork Manchester Could Change Everything
Look behind the headline-grabbing decision by Deloitte to sign up for 35K SF of WeWork floorspace at the Hanover Building in the city's tech and media dominated Northern Quarter, and it begins to feel like it might be the tipping point for traditional office leasing.
The three-way arrangement between Amazon, WeWork and Deloitte is a sign that in future major occupiers will want less space on very different terms.
Here are four reasons the Manchester office market is about to turn summersaults.
1. This Really Is All About Flexing
The deal, which sees the three parties co-operate to solve a workspace problem, hinges on Amazon which has an option (of some undisclosed kind) on WeWork’s 90K SF space at Federated Hermes’ Hanover Building, in Manchester’s Northern Quarter. It occupies three floors, and WeWork three floors under its own name, with the idea that Amazon can flex up when it needs to.
Now Deloitte is to temporarily occupy 35K SF from early 2021, space Amazon doesn’t yet need. And in the meantime Deloitte has found a temporary roost as it sorts out its relocation from Hardman Street.
When it occupied the Hanover Building space in January 2020 Amazon said “a couple of floors” were still in WeWork’s hands, which Amazon would be taking over the coming years as it increased its head count, the Manchester Evening News reported at the time.
2. Nobody Needs Much Floorspace
Deloitte took 67K SF at Hardman Street, Spinningfield, in 2007. Now it will occupy a sharply reduced footprint over two floors at the Hanover Building, yet the headcount is larger and growing.
Deloitte report an 800-strong team will be based at Hanover Building, and the total is still growing, up by 60 in the last 12 months and a new cyber team of 16.
Further growth includes a new cohort of more than 80 graduates and Brightstart apprentices joining the firm over the next three months as well as an overall plan to increase the office headcount by 25% in the next three years.
Deloitte's requirement for its permanent roost, if and when it gets one, will be 35K SF.
3. The Northern Quarter Is The Future
Deloitte is about to do something unthinkable in 2007, when it signed up for the Spinningfield offices now being replaced: It is moving from the swankiest corporate district in Manchester to a location mostly known, until a few years ago, for pleasantly dangerous nightclubs, retro fashion junk shops and some very dicey-looking pet shops. The Northern Quarter's rebirth as the new focus for social and cultural life in the city now looks like it is attracting serious interest from professional occupiers who want a slice of cool pie.
4. WeWork Is A Serious Player, Despite Everything
The move comes as WeWork completes its UK regional rethink, deciding to leave its Manchester operation largely untouched.
The U.S. coworking operator has severely pruned its Birmingham operation but the only Manchester casualty is a plan to open a 50K SF hub at Boultbee Brook's Hyphen development, Mosley Street. WeWork withdrew from the deal in July 2020. Four other Manchester outlets remain in operation: 1 St Peter’s Square, the Hanover Building, Dalton Place and No1 Spinningfields.
“We have a clear real estate strategy in place, and the move to the Hanover Building is the first step on that journey. The space provides an exciting and inspiring place in which our people can work. It will best support the needs of our people and our clients as we grow our business in the region,” Deloitte North West senior partner Andy Westbrook said.
Colliers International advised Deloitte.