24 JANUARY 2017 – Beech Holdings has acquired a block at St James Square, off John Dalton Street – a new area for residential conversion. The address is just outside an exclusion zone.
An apartment builder has snapped up a city office block as the Manchester city centre house boom stretches into new territory.
Beech has paid £5.27m for the 30,000 sq ft office block at 11 St James’ Square.
The deal with Readycount, a subsidiary of stockbrokers W H Ireland, means the financial services company can stay put until the summer, but the building will then be converted to residential use.
The address is just outside an exclusion zone covering most of the southern-central area of the city centre.
Within the exclusion zone – whose boundary runs down John Dalton Street – conversion of office buildings to apartments requires consent.
Outside that area, developers can invoke permitted development rights to allow them to convert offices into apartments quickly.
The move into the unexplored territory is being hailed as a sign that Manchester is transforming itself into a true live-work city.
Stephen Beech, the founder of Beech Holdings, said: “We are turning large numbers of young professionals and graduates away every day at the moment. This latest acquisition will go some way to increasing the supply of much-needed residential apartments across the city region.”
Oliver Rowe, the associate partner at WHR Property Consultants, who advised on the sale, said: “This transaction demonstrates that Manchester is further developing into a true live/work city, with a high demand for high quality, centrally located residential accommodation. This allows certain residential developers to compete in areas previously dominated by commercial development.”
Observers say commercial developers were outbid because the floorplates at 11 St James Place were too small for modern commercial use, which prevents office rents from climbing.
At the same time, a residential developer could benefit from the relaxed planning regime in this part of the city centre, meaning they can achieve higher values than commercial developers.
However, Rowe says he does not believe this heralds a residential take-over of the John Dalton Street area.
“This is still a viable office location. The asset was highly coveted and received significant interest, with the majority of underbidders proposing office development or refurbishment.”
“The area’s potential as an office location can be further substantiated by the significant investment being made by Tesco Pension Fund with the redevelopment of Dalton Place – formerly KPMG’s St James House – and GMPVF’s proposed island site redevelopment, both on John Dalton Street.”
This is not the first Beech move into typical office addresses. They acquired the 10,000 sq ft block at 25-27 Cross Street, above a branch of Pret-a-Manger, for conversion into apartments.
The firm is also converting old office blocks into apartments in more traditional residential parts of the city centre.
In July last year, the firm paid £3.5m for the 24,000 sq ft Salisbury House block, off Princess Street, for conversion into 90 apartments.