TECH SPECIAL: How Manchester Property Will Ride The Tech Wave
Manchester's tech economy is vast, valued (conservatively) at £3.2B and still growing. Today tech is part of everything the city does. But there is room for enormous growth as a raft of just-published research shows.
In practise, what will it mean for property if Manchester becomes the U.K.'s first totally tech city?
Ahead of Bisnow's Manchester Office Mania event on 8 November, Bisnow assembled a panel of experts to explain what's coming tomorrow, and the day after tomorrow.
Online giant The Hut Group's decision to take a 1M SF HQ campus at Manchester's Airport City shows how far tech and the office market have now morphed into one mighty economic engine.
Today the tech sector stretches well beyond the narrow definition of information technology, telecoms and pure computing. Advanced manufacturing, advance materials, life sciences, media, medicine and entertainment are all part of the tech mix.
According to new data from Knight Frank even the narrow IT-focused definition of tech puts Manchester in a commanding position. An analysis of take-up within the
Manchester market over 2013-17 shows that there were some 144 leasing transactions from occupiers within the IT and telecoms sector. These deals accounted for more than 770K SF of office space. For context, that is a volume of space greater than total 2017 take-up across all sectors in six of the 10 major regional centres. Notable transactions include Amazon, Bet 365, Booking.com and Jaguar Land Rover.
If the figures were recalculated to include the full range of tech interests they would be many times larger.
According to Knight Frank this is the moment to rethink the Manchester office market. It argues for a repositioning of the city away from a back office processing function, and towards a business-critical technology heavy function drawing upon tech talent in the city and its surrounds.
"As retail banks and law firms seize their opportunity to restructure, they will further gravitate towards high-quality, centrally located and flexible office spaces," the Knight Frank report said. "Amid disruption from tech they will further adopt those occupational strategies displayed by tech companies over recent years."
Manchester Really Could Be The Next Silicon Valley
Manchester has a huge advantage among tech-enabled cities: its unique geography. The Oxford Road corridor, stretching from pure city centre offices, through two universities and two hospitals, provides the ideal breeding ground for new tech businesses. This could be the Silicon Valley of the future NBBJ Design Director Ingo Braun said.
"I think we can say that Manchester’s tech cluster is probably going to work," Braun said. "It’s got all the same ingredients as Silicon Valley, which was a mix of Stanford University, the city authorities and the right occupiers all in one place together. Compared with every other U.K. city Manchester has an edge because of its geography and critical mass.”
The challenge, however, will be to get uses that, today, sit next to one another to eventually merge into one another. This is the next step, and cannot be avoided, if Manchester is to make the most of its tech city status, Braun said.
“Buildings are still too much in silos, with different facilities for different sectors which do not cross over into one another. We have pure offices, we have research, we have spaces like the 170K SF Royce Building [which aim to be more flexible and transparent] but co-location isn’t really possible, and it needs to be if buildings are to be sustainable and long-lived assets for the future,” Braun said.
“The idea of collaborative working is now a reality for businesses, but not so accepted in practise by developers. There are things they can do that help, like making sure a building’s service cores are not in the centre of floors, but also by getting buildings to cluster, and to mix up public and private spaces. That’s because tech occupiers want to be seen, visibility helps occupiers and raises the value of property, and we need more of that kind of permeability.”
Braun said Manchester’s unique geography must be exploited more fully. “The Oxford Road corridor has huge potential. The next step is to get the buildings there to interlock more fully.”
Learn To Love Pop-Ups
The Manchester retail sector will also feel the force of Manchester's tech revolution, leading the way for other cities to follow. The big winners could be King Street and St Ann’s Square, which have struggled to maintain their place in Manchester’s retail hierarchy over the last two decades. Their mix of buildings and unit sizes was a turn-off in the age of the standardised national multiple retailer. But in the new tech city, the mix of buildings is a positive advantage Barton Willmore associate Nicole Roe said.
“Retailers simply don’t need the larger 10-20K SF units many were going for, with retailers like Next using pop-ups and concessions to fill the floorspace," Roe said. "The future for these units is to be divided into smaller units, but that creates a lot of opportunities for new and smaller retailers. Combine that with pop-ups and you have a much more interesting streetscape and a move away from identikit shopping streets.”
“The effect of tech on the retail sector could be to save locations like King Street and St Ann’s Square. We’ve already got Google Garage on King Street, and stores like Lululemon moving in, the arcades are picking up too.”
Roe’s lesson for Manchester tech city is to learn to love its retail pop-ups. “Retailers know they can’t focus on millennials any more — they need to get at Generation Z, the younger people they need to get out of their bedrooms and give them something to look at, something exciting and different and that is what Manchester can do. It’s got a great pop-up culture, we’re already seeing small retailers move out of places like Afflecks into other locations, and we need to embrace that. Pop-ups are a real advantage.”
Warehouses And Factories Will No Longer Be Standard Boxes
The industrial sector can expect some of the most profound changes as Manchester transforms itself into a tech city. According to Knight Frank, as industrial real estate becomes a source of strategic and competitive advantage, occupiers will be prepared to work in partnership with landlords and developers and make longer-term commitments to bespoke properties. And they really do mean bespoke: variety will be the watch-word.
Expect an age in which multi-user, multi-level and mixed-use buildings are created to overcome land supply constraints. Expensive tech will mean higher security, and data analytics will be key as temperature control becomes increasingly important, Knight Frank predict.
Get Serious About Community
Above all, expect the geography of the city to change as tech begins to exert its influence on Future Manchester. Lou Cordwell, board member of the Greater Manchester Local Enterprise Partnership and founder of Manchester-based digital design studio magneticNorth, says that words like "community" will have to develop deeper meanings, which means making places that work for people.
“As we've already seen, digital growth is helping to widen the city boundary by driving growth and demand for space. But it's also shaping the kind of space we need — in terms of being more flexible and community-led, as seen at NOMA, St John’s and developments including WeWork," Cordwell said.
“To support our digital ambition we'll need to keep delivering on these fronts, making the kind of spaces that digital talent and businesses want to locate to. What's also important, given the ongoing skills gap in digital, is that we continue to invest in desirable and affordable transport and housing as well as our cultural offering, to maintain the city's burgeoning reputation as a great place to live."
Manchester's tech ambitions are sure to change the city, but the extent and depth of the changes it brings could be surprising.
To join the conversation at Bisnow's Manchester Office Mania event on Thursday 8 November register here.