Stockport's Big Moment Is Now
Stockport is having a moment.
The Cheshire town, home of hats and bobbins, is one of the two most affluent of Greater Manchester’s 10 boroughs. (Trafford is the other.) Yet its development potential has, until recently, gone largely unnoticed.
Suddenly, it has all changed. Last week two major town centre redevelopments took a leap forward. Could the coronavirus pandemic be about to seriously magnify the town’s appeal to occupiers and developers alike?
Just a few days ago Manchester-based Investar took the wraps off its plans for the prominent Stockport College campus next to Stockport town hall. There will be 442 apartments plus workspace and leisure including the conversion of an existing 120K SF building. Work on-site begins early next year for completion by late 2024.
Days earlier Capital & Centric, the Manchester developer behind a wave of city-centre mill redevelopments, announced the £60M redevelopment of Stockport's Weir Mill. There will be 250 apartments in the Grade II-listed building, backed by a grant from the public sector.
And both come as developers eye the rapid growth potential of Greater Manchester fringe locations where competition is more limited, land prices are low and the prospects for rental growth good. Stockport and Bolton have been tipped by observers who point to Manchester's outer boroughs as the focus for growth.
Yet the spin-offs of the coronavirus pandemic could be about to produce a surge of new socially distanced office and residential enquiries, and a sudden rush of developers heading to Stockport to meet the new demand. Why? Because if office occupiers, and residents want more space, where better than a town in the conurbation’s wealthy southern belt with a ready-to-go property market, and land prices at a 30% discount to Manchester city centre?
“The pandemic certainly won’t harm Stockport’s office market,” Knight Frank Manchester head David Porter said. “That’s because in both the short- and medium-term occupiers will be looking at options for accommodation with easier access less reliant on public transport, and with more floorspace for less dense workplaces to allow social distancing. “
“Stockport is cheaper than Manchester, is close to Manchester, is close to the south Manchester and Cheshire towns where many office workers live, and so Stockport will benefit.”
Porter is already fielding enquiries from occupiers looking to add up to 25% to their existing floorspace to meet social distancing requirements. “Contact centres are looking at ways to take more floorspace, and are looking at 12-month deals with rolling breaks.”
“We’re going to see some short-term lets on Stockport floorspace, but remember the town isn’t awash with office supply. There’s probably 100K SF available, that’s all,” Porter said.
Stockport rents may nudge up from the mid-teens per square foot on older refurbished floorspace, and early 20s per square foot on new build.
The effect will be to encourage more office development because the local land price — the entry fee into the Stockport market — remains low, yet opportunities are still relatively scarce.
Developers are sniffing out their chances. Glenbrook was ahead of the game, announcing earlier this year plans for a 64K SF office-led redevelopment of the former Marks & Spencer department store in Stockport town centre. Two floor plates of 16K SF are promised.
Others will be close behind said Investar chief executive Michael Dong, who is promising some serious office space in his 3-acre Wellington Street South town-centre scheme.
Investar was selected as preferred developer in November 2019 to redevelop surplus college land in Stockport town centre. It would have been easy to let the pace drop, given the events of the last three months, but it chose not to.
“The point is not just that the entrance fee to the Stockport development scene is lower, it is that it is reasonable,” Dong told Bisnow.
“Plus you get a large catchment population. That is a reason to invest, which is why we speeded up our application for this site and it has progressed during the pandemic.
“We know residents of city living schemes will want more space and more flexibility about how they live and work, and we think we can provide this. And post-pandemic, there will be a lot of emphasis on local services and amenities, more focus on the town rather than travelling, and Stockport can do that and offer everything people need.”
Land prices are about one-third central Manchester levels, Dong said, making the residential arithmetic appealingly straightforward. Dong says the cost per residential unit in Stockport works out at close to £15K/unit, as opposed to £30K/unit in Manchester.
Is Stockport a gamble? “Yes, but developers are gamblers,” Dong said. “Stockport has a clear strategic direction, so that limits risk. The gamble, if there is one, is what eventual sale prices will be. Today, without any evidence, everyone can be right. Eventually we won’t all be right. Our appraisal ballpark is about £300/SF capital values. It’s a risk but we’re confident and we have first mover advantage.”
Dong’s logic works in the office sector, too. Muse partnered Stockport council in the 108K SF Stockport Exchange speculative office development. It also controls a selection of opportunities farther out of town at the 64-acre Cheadle Royal business park where it recently secured forward funding from Schroders Regional Office Property Unit Trust.
Muse Senior Development Surveyor Tom Webber said the pandemic has not derailed leasing deals in the town, and may be about to deliver more new enquiries.
“We have 22K SF at Stockport Exchange in legals at the moment, part of a deal that concluded after lockdown in March, which shows the strength of Stockport’s appeal,” Webber said
Top rents at Stockport Exchange are £22.50/SF, with just 16K SF remaining. Out of town at Cheadle Royal, Muse is already delivering a 26K SF building, and has a 30K SF plot yet to develop. There is no speculative floorspace available.
“We’re already getting post-pandemic office enquiries," Webber said. "Different business sectors are responding differently, enquiries are not all the same. Maybe what we’re seeing is an acceleration of the existing trend for more health and amenity in the workplace. It wouldn’t surprise me at all to see some occupiers opt for Stockport in the medium-term. The longer-term will depend on the strength of Stockport town centre, which becomes ever more important as people seek local amenity, as an alternative to travel, in the post-pandemic world.
“Stockport town centre will do well thanks to its own strengths, not just thanks to relocations from Manchester. The town has its own catchment, and we’ll see that become more important as the post-COVID push towards local facilities grows.”
Webber declines to make rental growth predictions, fearing a looming recession and deflationary pressures may undo the upward influence of increased demand for Stockport floorspace. But he remains upbeat. “The market will decide, and the fact is the supply of office floorspace in Stockport is limited.”
It is trite to claim that every cloud has a silver lining. Even so, clouds often do. Maybe one of them is about to part over Stockport? If it does, the town’s office and residential markets could come out of the coronavirus pandemic looking considerably more appealing.