How increasing rents reflect Manchester’s appetite for restaurants
There has been a long held debate over which city considers itself the UK’s second city. Do the expansion plans of the nation’s bar and restaurant operators give us any clues?
Could Manchester, renowned for its historical cloth industry, Coronation Street, a couple of football clubs and (of course) Oasis, find a new identity as the prime northern location for eating, drinking and dancing? David Sutcliffe of specialist leisure property advisor Fleurets looks at the city’s booming restaurant scene.
Having witnessed increasing pressure on rents in London as well as the south eastern regions, many operators are looking to other regions for new site opportunities. Equally, northern based operators, such as Living Ventures and Individual Restaurants have continued to innovate and develop new units, particularly in Manchester city centre.
The result over the past decade is that Manchester has recorded the fastest rate of restaurant and bar openings anywhere in the UK. Major inward investment, including improved transport links, the fully integrated public transport network, re-development of city centre sites for residential purposes and an influx of new businesses (including Media City), has seen the city experience an economic boom.
There were over 30 new openings in 2015, with similar numbers expected for 2016. These numbers are likely to outstrip any of the other regional cities and further demonstrate the growth and strength in the Manchester leisure scene. Not only has there been an increase in numbers, but also an improvement in the quality, with operators such as The French and Manchester House pursuing Michelin star status.
Within the city centre, the Corn Exchange re-opened in July 2015, following a £30 million refurbishment by the owners, Aviva Investors Property Trust and Queensbury Real Estate. Within this development there are a large number of restaurants including Wahaca, Cosy Club, Byron, Zizzi’s and Gino D’Campo’s My Restaurant, the latter being their first venture into the UK. The rent achieved reached a heady £50 per sq ft reflecting the desirability of this prime space within an iconic Grade II listed property.
Elsewhere in Manchester, rents continue to grow, with sites on Deansgate now commanding rents of around £40 per sq ft. Bill’s acquired a unit in John Dalton House, just off Deansgate in March 2014 reflecting £42 per sq ft, and setting a new benchmark for Deansgate rental levels. Deansgate, one of Manchester’s main streets, is home to the neo-Gothic John Rylands Library as well as the Hilton Hotel, the UK’s tallest building outside of London.
Alongside the likes of House of Fraser and All Star Lanes (which allows customers to drink and dine whilst ten pin bowling), resident restaurants include The Living Room, Hawksmoor, Evuna Spanish Tapas Restaurant, Bella Italia and Las Iguanas to name but a few. Whilst just off Deansgate sit The Grill on the Alley, Revolución de Cuba as well as Australasia, the latter being part of the Living Ventures group.
At the most southerly end of Deansgate lies Deansgate Locks, where the railway arches play host to the likes of Vodka Revolution, a Manchester grown brand founded in 1996, which has since expanded from their first site a short distance away on Oxford Road to become a national household name. Even though this location may be considered secondary, these sites are still commanding rents of £25-£27 per sq ft.
Similarly, Spinningfields, dubbed Manchester’s luxury dining quarter, is attracting restaurateurs paying £35-£40 per sq ft, and operators include the likes of Carluccio’s, Artisan, Ibérica, The Lawn Club, Manchester House as well as the unmistakable Oast House.
Every thriving city has a new and ‘upcoming’ area and for Manchester it is the Northern Quarter, which is now seeing rents between £10 and £15 per sq ft. Here the tastes of the experimental and quirky are all catered for and operators include the likes of Turtle Bay, Luck Lust Liquor and Burn, Home Sweet Home and Almost Famous.
Operators are keen to get their brands into central Manchester locations and to become part of the buzz. Recent new sites include Smokehouse & Cellar, having taken a site next to Manchester City Hall, whilst Drake & Morgan are set to take two sites in Spinningfields as well as One St Peters Square.
The strength of the occupier market has not surprisingly had a positive effect on investment values as yields have fallen. 76/80 Deansgate, let to La Tasca and the New World Trading Company (t/as Botanist), was sold by La Roque Trust Company to CBRE Global Investors in July 2015 for just over £7 million, reflecting a net initial yield of 5.47%.
Recently, Manchester-based restaurateur Karina Jadhav, co-founder of Neighbourhood restaurant and bar in Spinningfields, has launched a city centre concept restaurant, Menagerie, investing £1.5 million. The bar/restaurant will occupy a 7,500 square foot ground-floor site within One New Bailey, an eight-storey development on the banks of the River Irwell. The venue offers an “immersive” dining experience with tables positioned to witness anything from fashion shows to theatre performances.
These headline rents are some of the highest, if not the highest, in the country outside London and the South East, and are indicative of Manchester’s booming market. Manchester is possibly reaching a saturation point and it has been noted there have recently been a number of casualties in the restaurant sector. As with any growing market only the fittest and best located are likely to survive.
It must be remembered what is successful in London does not always necessarily translate to the regions and to coin a phrase from the late Tony Wilson: “This is Manchester. We do things differently here”. Whilst there are undoubtedly many other factors to consider, based on the activity and diversity of the leisure market, Manchester possesses strong claims to be considered the nation’s second city. Perhaps the most appropriate title would be the UK’s second dining city.
David Sutcliffe joined Fleurets in 2000 after working for 11 years at Greenalls where he was Group Portfolio Manger. He has also worked for Scottish & Newcastle. As head of the North West office based in Manchester, he deals with capital and rental valuations, as well as agency matters, for all types of licensed and leisure property. He also provides estate management and asset valuation advice for both national and regional companies. David is a Member of the Royal Institution of Chartered Surveyors and regularly acts as an Expert Witness for clients in arbitration and valuation matters.