Lenders have funded a £100m office block in Manchester that is only one-sixth full in a sign that the property revival has rippled beyond London.
It is the biggest property debt deal in the northwest since Allied London, the same developer, raised £150m for a nearby block almost a decade ago. The 20-storey No. 1 Spinningfields is 300,000 sq ft and completes the £1.6bn estate dubbed the “Canary Wharf of the North” in the city centre. PwC, the “Big Four” accountant, is taking 50,000 sq ft but is the only tenant signed up as work begins.
Lloyds Bank, Pramerica Real Estate and the North West Evergreen Fund, a public sector fund backed by the European Union, are lending the money at an average interest of 6.5 per cent.
Michael Ingall, chief executive of Allied London, said: “It is backing for Manchester and backing for Spinningfields.”
“Even in London it is difficult to secure debt for a speculative development.”
He said that the deal showed investors were returning to the property market after the crash of 2008. However, they would only back top quality buildings in good locations.
The building, opening in 2017, will have four restaurants, an open plan airport-style business lounge and a self-contained “events box” that could be hired for seminars and board meetings.
It will also have a roof garden in line with the recent trend for outdoor space in offices. It is the tallest office block to be built in Manchester since the Co-operative Insurance Tower in 1962.
Mr Ingall said he could have sold the block on to a foreign investor but would not have had as much freedom over the design. RBS is the biggest tenant in Spinningfields with 7,500 staff.
Allied is now working to convert the former Granada TV studios, including the Coronation Street set, into a new leisure, housing and commercial district.
Expected total sales of offices, shops and warehouses in northwest in first quarter, 85% higher than same period last year
M & G Real Estate paid £92m for an office block in Spinningfields this year. Northwest sales of offices, shops and warehouses are expected to be £746m in the first quarter, almost 85 per cent higher than the same period last year according to research from Colliers, the property agent.
Walter Boettcher, of Colliers, said: “Increased government impetus on promoting cities such as Liverpool and Manchester may be encouraging institutional and other investors . . . to make bigger commitments to the Northwest.” Midlands deals were also up. HSBC last week announced it was moving 1,000 jobs to Birmingham.
Andrew Antoniades, director of CBRE, advisers to the North West Evergreen Fund, said its £12m was needed to de-risk the deal. “While lending on developments in the regions is slowly returning, it remains incredibly selective.”
Iwan Griffiths, PwC’s Northwest chairman, said: “It is an exciting time for us and for Manchester, with buoyancy in the market and the presence of cranes in the skyline indicating resurgence in development.”
Get alerts on Allied London Properties PLC when a new story is published