It is now a decade since the first phase of MediaCityUK was completed.
A huge 200-acre area of wasteland that once housed Manchester’s docks was transformed into a glistening tech and media hub.
The BBC was the anchor tenant in a move that was meant to show a commitment to breaking London’s grip on media power.
ITV followed suit, along with the University of Salford, and MediaCity is now said to be home to more than 7,000 employees.
This week it was announced MediaCity will move into a new era after it was bought by LandSec, the biggest commercial property company in the UK, for more than £425million.
LandSec acquired a 75pc stake while Peel L&P, who first launched the development with Legal&General in a 50:50 venture, will retain the other 25pc and continue as asset manager.
It follows a separate move by LandSec to buy U+I, the developer leading the Mayfield regeneration project, beside Piccadilly station, that involves the building of the first city centre park for 100 years.
Boss of LandSec Mark Allan spoke to the Manchester Evening News about what the future holds for these projects, and why investors with big pockets are flooding into Greater Manchester.
‘Opportunities like both of these are incredibly scarce’
LandSec, headquartered in London, has a property portfolio worth around £11billion.
Up until recently, it has concentrated on central London offices and shopping centres such as Bluewater.
Mark Allan joined as the new CEO eighteen months ago and said he undertook a ‘full review’ of the business and its strategy, and decided it needed new opportunities for growth.
He believes that is most likely to come from what the property industry calls ‘mixed use development’.
“The idea being that in the past five to ten years, the notion that people live in one place, travel to work somewhere else, travel to shop somewhere else, travel to go out with their friends somewhere else… those lines are becoming much more blurred,” he said.
“And I think the pandemic only increased the focus on that, with people wanting to be able to live, work, shop, play within the close vicinity of where they are, rather than having to do lots of travelling on public transport.
“So we wanted to invest in big mixed use projects. A mixture of residential, offices, retail, leisure etc.
“And we wanted to do it quite quickly. So we started looking about a year ago and two of the most exciting projects, and the most progressive projects, were in Manchester, in MediaCity and Mayfield.
“They’re both fantastic projects, MediaCity much more progressed, you’ll know better than I do just how fantastic that has been for Salford for the waterfront area around there, you’ve now got the BBC, ITV around there, Salford Uni, huge studios, a big tech and media hub on what was effectively redundant brownfield land 15 years ago.
“The chance to get involved with something like that, and with another phase of development to come, a mixture of offices and residential, was really exciting.
“And Mayfield is 30 acres, next to a massive railway station in the centre of one of the largest, and certainly the fastest growing, regional economy in the UK.
“Opportunities like both of these are incredibly scarce, so hence why we’re so excited to have the opportunity to come in, alongside the existing partners in all cases, and hopefully add something, including hopefully, some of our capital, our cash.”
‘MediaCity is effectively full’
MediaCity has outline planning consent that could essentially double its size in the future.
Mr Allan said LandSec intends to inject capital to get building more offices targeted at the tech and media sector quickly.
“It has such a great reputation as an ecosystem that’s built up around the studios, the BBC, ITV etc, 250 small and fast-growing businesses in the tech and media space,” he said.
“But there isn’t really any office space left for them to occupy in MediaCity because it’s effectively full.
“So building some more offices is probably the first step and that could happen as early as 2023, in terms of starting on site.”
Looking into the longer term, Mr Allan says LandSec will be guided by what Peel and local residents say they want.
That could be apartment blocks or leisure and retail facilities, he said.
‘Manchester was growing at 3.8pc, London was 2.3’
Why has LandSec chosen to put its money in Greater Manchester?
It is not the first significant investor to have bought up assets in the city region in recent years.
Others are from much further afield.
Another Peel project, the Trafford Centre, was recently acquired by Canadian pension fund CPPIB.
And earlier this year, Miami-based Starwood Capital Group bought the Renaissance hotel site on Deansgate in a joint venture with Property Alliance Group.
Manchester City Council also has joint property ventures with Hong Kong-based Far East Consortium (FEC) and, of course, Manchester City FC’s owners the Abu Dhabi United Group.
Mr Allan explained that international capital sees Manchester as one of the hottest tickets in town.
“If you look at the economic growth that Manchester saw in the five years up to the pandemic, Manchester was the strongest growing economy in the country, by quite a way,” he said.
“It was growing at 3.8 per cent a year, London for example was 2.3, Birmingham was I think around 2.9.
“What we like about Manchester is it had that momentum coming into the pandemic, it seems to be recovering it really strongly as we come out of the pandemic, and success stories have a habit of really building momentum and keeping going for a long time.”
‘Manchester is very much on the radar’
There has been much talk in the investment world in recent years of ‘north-shoring’.
It is a term used to describe the trend of businesses moving out of London and the south east to northern cities to save money.
(Image: 2020 Midi Photography)
In the post-pandemic world there is increasing speculation as to whether this will accelerate now that office-working has become less essential.
But Mr Allan doesn’t think that Manchester’s growth is reliant on businesses moving in from elsewhere.
“The UK in a global context is quite an unusual country, from an investment point of view anyway,” he said.
“It’s historically been very London-centric, and so there’s been a lot of investors going in and buying offices, shopping centres and residential towers and things in London.
“But we’ve definitely noticed that over the past five plus years Manchester is also very much on the radar for that international capital in a way that I think very few other regional cities at the moment are.
“So I think that’s a big positive because as an investor in property, you want to know there are other investors interested, that tends to help the values, it tends to help the liquidity, the ability to sell if you want to sell a little bit of your holdings for example.
“So Manchester to me seems to have that more than elsewhere.
“Then you look at the economic growth story, it’s a very compelling one.
“After London, Manchester is the largest economy, largest office market, largest build to rent residential market, has the most liquidity in terms of property investment each year, so I think for us it ticks all the boxes in a way other cities don’t quite.
“I think there will be other investors, there already are other investors, looking at Manchester in that way.
“If I look at office utilisation at the moment, the number of people back in offices, generally speaking that’s higher in the regions than it is in London.
“I think one of the reasons for that is there’s probably less reliance on public transport, more people driving, perhaps more affordable accommodation in relative terms close to where people are working.
“I think there are some of those factors that add appeal.
“I’m sure North-shoring is a thing, but to me the economic growth in Manchester is being generated in Manchester and not by jobs moving from elsewhere.
“It’s got its own centre of gravity. I don’t think it’s reliant on drawing people in, or jobs in from other cities, I think it’s creating its own jobs.”
‘More people are back in the office in the regions than London’
Not only has Greater Manchester shown stronger economic growth than anywhere else in the country, but investors clearly think it’s set to continue.
In a single planning committee last year, Manchester council signed off more than £1billion of investment.
Plans include new skyscrapers, student accommodation, offices and even a second arena next to the Etihad in east Manchester.
(Image: 2020 Midi Photography)
Mr Allan said there is no single ingredient as to why Manchester is attracting more investment than other cities.
“I think lots of things contribute to that success,” he said.
“I think the political environment within cities is always important, Manchester has had a reputation for a long time as being pretty progressive in terms of how its sought to unlock development.
“I’ve mentioned the universities, graduate retention – that’s important.
“You’ve got a lot of cities where students go to uni and then they graduate and then they end up moving somewhere else.
“Whereas graduate retention in Manchester is close to 60pc.
“So the success of the universities, international students and domestic students then choosing to stay and live, that all contributes.
“Having two world famous football clubs with huge global followings, that may sound silly but it has a real bearing on how people think about a city. It just helps build the brand.
“I think it’s all of those ingredients… not one single thing.”
Reflecting on what LandSec’s purchase of MediaCity means for the future of Greater Manchester, Mr Allan was clear.
“It’s a significant investment,” he said.
“Businesses like ours, we don’t make those decisions lightly and it’s very much a vote of confidence in the future, no question.”
To get the latest email updates from the Manchester Evening News, click here.