The three months to February 2018 saw lots of new schemes being proposed and starting construction, but not quite as many as in previous quarters, as UrbInfo's latest Manchester Development Update finds.
There are now 14,907 apartments under construction across the study area, which includes central Manchester, central Salford, Salford Quays, Hulme and parts of Trafford. This number has increased by 1,985 homes under construction since the last update in November 2017. This is despite 329 apartments completing over the same period. There are a further 19,820 apartments in planning but not under construction. This includes schemes with planning approval and those which are awaiting determination.
Meanwhile, there is currently over 1.4 million sqft of commercial space under construction across Manchester, with 1.3 million sqft of this under construction in Manchester city centre. Despite the completion of 300,000sqft of office space at Number 1 Spinningfields this quarter, this figure has been further bolstered by construction starting at Circle Square blocks 2, 3 and 4 which will provide 390,000sqft of office space in total.
Finally, there are 1,325 hotel beds now under construction across the city, with 799 having being delivered in the past 3 months. There are also a further 3,254 hotel beds in the planning system, a number which has increased by 792 since November 2017. The vast majority of hotel schemes are located in Manchester city centre, which contains 4,510 hotel beds out of a total pipeline of 5,825 hotel beds across the city centre, Salford Quays, Central Salford, Hulme and Trafford.
Several high-profile residential schemes have started on site in Central Salford since November, meaning the number of homes under construction here has shot up to 5,359. The latter phases of Dandara's gigantic Chapel Wharf scheme have started on site, as has Fred Done's 405-apartment scheme at The Crescent; and Elliott Group's 34-storey The Residence project, which will deliver 310 apartments.
Meanwhile, the number of apartments under construction in the City Zone (Manchester's city centre) have also reached new heights, soaring to 5,986. With schemes such as Capital+Centric's conversion of Crusader Mill in Piccadilly to 201 apartments starting on site soon, alongside Eider House (127 apartments), the number of apartments under construction in the City Zone could well hit 6,000 in 2018. Back in Central Salford, Embankment West (356 apartments), Middlewood Locks phase 2 (546 apartments), and Gore Street (364 apartments) are all due to start on site in 2018, which means Central Salford and Manchester city centre could compete over number of homes under construction in 2018.
Other areas of Manchester remain quite subdued for now, with Salford Quays flatlining. X1 Developments have now completed construction on the first phase of their MediaCity scheme, delivering 275 apartments over a 26-storey tower. The second phase of this huge project, delivering over 1,000 apartments in four 26-storey towers, is already rising. Meanwhile, Peel Holdings have also started construction round the corner on the second phase of their Lightbox scheme, which consists of two 20-storey towers delivering 477 apartments in total.
The number of apartments in the planning system (but not under construction) has decreased significantly in Central Salford as the number of projects moving to construction has not been replenished with new units entering the planning system. This figure has been in decline since August 2017 in Central Salford, with a limited number of new residential projects announced in this area. After two quarters of decline, the number of apartments planned for the City Zone is finally on the increase again. This follows several major new planning applications since November, including the redevelopment of the Great Northern Warehouse which will provide 142 apartments; three new towers at Echo St in Piccadilly delivering 403 co-living apartments; and Beech Holdings' new 15-storey venture at Thompson St in New Cross (155 apartments).
Salford Quays' pipeline is also struggling and is now at just 1,610 units in total. However, there are several large-scale schemes preparing to submit a planning application for the Salford Quays area which could come forward in 2018. There are over 2,400 units in the pre-planning stage in and around Salford Quays, including MediaCityUK Phase 2. SimpsonHaugh architects and developers Forshaw last week revealed their plans for a 34-storey residential tower at Clipper's Quay (near Exchange Quay Metrolink), which will contain 216 apartments in total.
Hulme, to the south of Manchester city centre, is now beginning to accelerate with several high-profile residential schemes launched and starting construction here in 2017. A planning application was submitted last month for 280 apartments at Peel Holdings and Glenbrook's Cornbrook Hub scheme, while across the road from here DeTrafford secured planning permission at the end of 2017 for 419 apartments at DeTrafford's No1 Castlefield scheme. DeTrafford have also submitted a planning application for 79 apartments nearby at St George's Gardens.
The strongest house price growth was witnessed in North Trafford, where prices rose by £15,317 (+7.18%) in just 12 months according to the latest data by Zoopla. Prices here have now overtaken that of the City Zone, where the average price paid is just over £213,000 - up 4.34%. Growth is also accelerating in Hulme, where prices have risen £10,000 in the past 12 months.
Weaker growth has been witnessed in Salford Quays and Central Salford, which rose between 2-3% in 2018. It's worth noting that prices in these two areas have actually decreased since the last update in November 2017.
Commercial activity is almost all confined to the City Zone, where there is nearly 1.3 million sqft of office space now under construction out of 1.45 million sqft across Manchester. Construction of office space in the City Zone is nearly at an all time high after construction started on 390,000sqft of space at Circle Square. However, in Central Salford, it has fallen to just 13,000sqft at ECF's conversion of Riverside House in New Bailey. Meanwhile, the only office block under construction at Salford Quays is Bupa's New Headquarters at Erie Basin, which will complete soon.
Pipeline commercial space is stronger in Central Salford but is non-existent in Salford Quays. In line with trends, the City Zone leads on amount of office space in the pipeline (but not under construction), with 1.6 million sqft. This is compared to 1.2 million sqft planned in Central Salford across multiple schemes, most notably Two New Bailey and 100 Embankment, which will deliver over 400,000sqft of grade A office space to Central Salford. Both are due to start construction during 2018.
In the City Zone, the largest pipeline office block is at Ask's Found Space scheme near Deansgate Locks, which will deliver just shy of 342,000sqft of space (more than One Spinningfields). However this is not due to start construction until at least 2019. Schemes due to start sooner include 1 and 2 Angel Square in the city's NOMA district, which are planned to deliver 450,000sqft of office space between them; and Manchester Goods Yard in the emerging St Johns district, set to deliver nearly 200,000sqft of startup space for the city's creative independent companies.
There is nearly 600,000sqft of office space proposed for Salford Quays, but this is still at the pre-planning stage and so many years off delivery. Much of this space is tied up in Peel Holding's MediaCityUK Phase 2 scheme, due for delivery in the early 2020s. Meanwhile, the City Zone has a further 2 million sqft of space in the pre-planning stage, across various major development schemes such as Mayfield (behind Piccadilly station); UX Manchester (behind Victoria station); Bruntwood's Oxford Road development (above Oxford Road station); and First St Central.
As with offices, it is the City Zone which dominates the hotels pipeline. There are 1,325 hotel beds under construction across Manchester and 999 of these are in the City Zone, with 326 under construction in Hulme. There are no hotel beds underway in Central Salford or Salford Quays, and since the completion of the Hilton Garden Inn at the Emirates Stadium, there are no hotel beds under construction in North Trafford now either.
However, there are 147 hotel beds proposed for Central Salford and a further 255 hotel beds planned for north Manchester at the Holiday Inn Central Park, and a new hotel at the Irish World Heritage Centre. Both have planning approval.
Clearly the residential market is the dominant sector for construction, regeneration and development in Manchester at the moment. Activity in all sectors is concentrated into the City Zone, Manchester's central business district, especially in terms of office and hotel development. Central Salford has seen a huge increase in the number of apartments under construction in the last three months, but in terms of offices and hotels this area struggles.
There is a record number of schemes under construction across Manchester, with the number of schemes under construction steadily rising each quarter for the past two years, even though there are roughly ten schemes completing construction each quarter over the same time period, as the graph below shows. 16 schemes started construction between November 2017 and February 2018, much lower than the yearly quarterly average of 28 schemes.
After steadily rising each quarter since August 2013, the number of schemes with a planning application but not under construction has fallen for the first time, from 216 to 212. This is perhaps worrying for the city's construction pipeline, as a block in the steady flow of new projects could hamper construction rates two or three years down the line. Sometimes a stagnant rate of projects with planning applications not under construction is due to a lot of schemes starting construction per quarter however, as mentioned previously, a below-average number of schemes started construction between November 2017 and now. There has also been a below-average number of new proposals announced this quarter, another worrying sign for the city's development pipeline.
Finally, as mentioned above, there has been a fall in the number of new projects announced this quarter. There were just 28 new scheme announcements, including 655 apartments in two towers of 52 and 22 floors at Renaker's Great Jackson Plot C; Cornbrook Hub Phase 2; a new masterplan for 1,219 homes at Gould St near New Cross; a 17-storey, 351-apartment scheme at Gallery Gardens off Chester Road; and two new hotels at the Airport, amongst others.
This compares to a 2-year quarterly average of 32 new projects per quarter, and a 4-year quarterly average of 29 projects per quarter. Worryingly, the number of new projects announced per quarter has been falling since August 2017, and has been much lower in the three months to February 2018 than in the three months to February 2017.
16 projects started construction in Manchester between November 2017 and February 2018, including Renaker's Chester Road scheme (188 apartments); Metropolitan University's new Arts and Media building; Elliott Group's 34-storey tower at The Residence in Salford; and Fred Done's 405-apartment scheme at The Crescent, also in Salford. The same number of schemes started construction between August and November 2017; but this compares to 28 schemes starting construction between May and August 2017.
Only 12 schemes gained planning approval in the three months to February 2018, comparing to a quarterly average of 27 schemes gaining planning approval in 2017.
Clearly, it's worrying that the number of new schemes coming forward in Manchester is lower than it has been in previous years, as it implies that construction rates may decrease in the near future. However, while Manchester's developers have concentrated on delivering many residential schemes recently, the city's hotel, office and student accommodation market has been relatively untouched. With regards to purpose-built student accommodation (PBSA), council planning policy since 2012 has restricted the amount of PBSA consents, while demand for PBSA has continued to increase as the city's universities expand. With the council proposing changes to their PBSA policy in 2018, this may lead to an increase in student accommodation proposals in the coming months.
Meanwhile, demand for Grade A office space in Manchester is well-documented and vacant office space is reportedly running out. Old office stock being refurbished into modern, Grade A space has helped the situation up to now but UrbInfo expects some new office stock to come forward in 2018 and 2019. This week Barclays have announced that they may be establishing a 600,000sqft Northern Hub at U+I's Mayfield masterplan scheme, while also this week Ask Real Estate and Patrizia UK have formed a joint venture to deliver 750,000sqft of office space at First St, near Deansgate-Castlefield Metrolink. During Q1 the Government Property Unit is expected to announce the location of their 175,000sqft requirement in the city, thought to be English Cities Fund's Two New Bailey scheme in Central Salford.
Finally, the city's hotels market is also beginning to pick up again after a three-year lull. New schemes include a 224-bedroom StayCity hotel in New Cross, designed by Simpson-Haugh architects; a 101-bedroom hotel in the Northern Quarter created by converting and adding a three-storey extension onto 28-30 Oldham St (formerly Dry Bar); and a new 88-bed aparthotel in Cornbrook.
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