黑洞社区

If you鈥檙e doing business in Liverpool, there鈥檚 one question you鈥檒l be asked again and again. Never mind your turnover, your experience, or whether you saw Corrie last night 鈥� the first thing anyone wants to know is: 鈥淎re you red or blue?鈥� They will, of course, be referring to Everton and Liverpool, or even, very occasionally, Tranmere Rovers.

Derek Walker, director of QS Walker Sime, set up a Liverpool office in June and he鈥檚 very much aware of the importance of the beautiful game. 鈥淭he North-west is a hotbed of football. If the football鈥檚 doing well, there鈥檚 a spring in people鈥檚 step.鈥�

Since Liverpool won its bid to be European Capital of Culture there鈥檚 been a different kind of spring in its residents鈥� steps, particularly among the property community. Walker is an excellent example of the infectious enthusiasm they display (even though he鈥檚 a Mancunian and a Man City fan). 鈥淥ver the past 12 months, I鈥檝e fallen in love with the place. It seems like it鈥檚 on the crest of a wave at the moment.鈥�

Indeed, the city seems to be going all out to shed its reputation as the down-at-heel 鈥渙ur kid鈥� of wealthier Manchester. As well as Paradise Street and the cultural regeneration of the docks, there are ambitious plans for the business district around Old Hall Street from local and regional developers such as Bruntwood, Downing, UK Land and Property and Maghull.

They鈥檙e hoping to emulate the success of Manchester鈥檚 Spinningfields or Birmingham鈥檚 Brindleyplace, but, this being Liverpool, it鈥檚 going to be bigger and better. The city鈥檚 residents have always been prone to hyperbole, but it was more usually deployed to secure hardship grants from various EU bodies targeting the areas deprived, the highest illiteracy rates and so on. But things are changing. In 2004, the 70-year tide of outward migration that nearly halved the city鈥檚 population to below 450,000 turned, albeit with only a token handful of new residents. But with them has come private investment, in place of charity handouts.

So there is much construction work to be won in the city and plenty of opportunities 鈥� as long as you know how to seize them (see box, overleaf). And those confident developers are even brave enough to assert that it鈥檚 credit-crunch-proof. 鈥淭he difference in Liverpool,鈥� says David Guest, Bruntwood鈥檚 regional director, 鈥渋s that it鈥檚 starting from such a low base. You go into some of the property in the city and the quality of the environment 鈥� how can I put this tactfully? 鈥� is more challenging than it should be. Businesses that are competing on a UK, European or global scale need to reinvest in office space. We鈥檒l see that continue for some time, even if the credit crunch continues.鈥�

Bruntwood set up an office in Liverpool in 2003, buying the old Littlewoods building for 拢24.5m and setting about a sparkling refurbishment. At the time, it was the most anyone had paid for a property in Liverpool, and was met with bewilderment, but their confidence appears well placed. Three years on, property entrepreneur George Downing bought the similarly sized 鈥淪andcastle鈥� over the road for 拢51m, setting another record.

Nearby is a site that demonstrates ambition on a whole other level. The Pall Mall development is billed as a new commercial quarter with 1.5 million ft2 of commercial and public space to be built over 10-15 years. Meanwhile, the 拢80m first phase of the St Paul鈥檚 Square development next door is now occupied by law firm Hill Dickinson, and the second phase is almost complete.

Quality offices and rents

Muse, St Paul鈥檚 Square鈥檚 developer, hopes that all this will break the vicious circle of low rents that has stalled Liverpool鈥檚 property market for decades. 鈥淲e want to lift the quality of office buildings so the city can start getting rents above 拢20 per ft2,鈥� says Dan Needham, Muse鈥檚 development director. 鈥淯p to now, the rents would only support a certain quality of buildings, but without the buildings you can鈥檛 get the rents. This is the first time that Liverpool鈥檚 been on a level playing field with Manchester and Birmingham in terms of grade A office buildings.鈥�

St Paul鈥檚 Square was a calculated gamble for Muse, but it has paid off. The first building was a speculative development, but Hill Dickinson took all 125,000 ft2 at 拢18 per ft2 before work started on site. 黑洞社区 two is also speculative but is now 40% prelet to DWF, another local law firm, and a major clearing bank at 拢20 per ft2.

As Guest says, much of the completed space in the city to date has been taken by local firms moving or expanding. But even the city鈥檚 bolshie development community knows it can鈥檛 get projects off the ground without more inward investment. 鈥淲e need to bring new jobs in, because Pall Mall is not going

There鈥檚 still a little bit of an attitude that people take
new build elsewhere but refurb in Liverpool 鈥� and we need to get over that

Dan Needham, Muse

to get built on the basis of existing employers,鈥� says Needham. 鈥淭here鈥檚 still a bit of an attitude that people take secondary space in Liverpool 鈥� they take new build elsewhere but refurb here.鈥�

Connections

Liverpool is still very much in the shadow of Manchester when it comes to attracting firms, not least from the construction industry. Manchester has the M62 and the M6, whereas Liverpool has been seen as a bit of a cul de sac, a satellite market that could be served by the Manchester office, or a centrally located one in Warrington. 鈥淭o get firms to base in Liverpool, you need to persuade them that both markets are big enough,鈥� says Needham.

Local developers are optimistic that that is going to change, with a new crossing over the Mersey at Runcorn from 2014, more flights from John Lennon airport and the growing importance of connections to the north Wales and Northern Irish markets.

But even if Liverpool does weather the credit crunch, the housing market downturn is worrying. For the past three years, 3,000 housing units have been completed in the city every year, far outstripping the regional target of 1,100. Nigel Lee, planning manager at Liverpool council, thinks that half of all buyers are from outside the city. It鈥檚 his job to balance developers鈥� ebullience and make sure that the most grandiose schemes don鈥檛 upset the whole boat. For example, Peel Holdings is seeking planning for a vast

150-acre scheme north of the centre that would include as much office space as Pall Mall, as much retail space as Paradise Street, and 23,000 apartments. Can there possibly be enough demand?

Lee isn鈥檛 sure yet, but he is understandably concerned that such a scheme will destabilise the fragile city-centre market. 鈥淲e want to encourage people to come back and live in the centre, and we鈥檝e got to be realistic. So if you鈥檙e filling 23,000 homes, fine, as long as it doesn鈥檛 displace the market here. My question is, how can we make Peel's aspiration good for Liverpool?鈥�

Lee has as much local pride as the next Scouser, but he believes Liverpool will never replace Manchester as the region鈥檚 hub and should be trying to provide something different. 鈥淚 get cheesed off when people say we want to be the next Shanghai or wherever. They鈥檝e got 20 million-plus people. If Liverpool succeeded in increasing to 500,000 in the next 10 years, that would be a mega achievement. I like to think of Liverpool as a unique British city. We鈥檙e a bit of an edgy city; maybe we鈥檒l always be an edgy city 鈥︹��

Lee may not want to compete with the Manchester juggernaut but there鈥檚 no denying the rivalry between the two cities. 鈥淚 love Manchester, we鈥檙e not a big rival of Manchester really,鈥� he claims, implausibly, then sticks his tongue out.

Many of Liverpool鈥檚 adopted construction professionals are from Manchester, and like Derek Walker, admit that they were initially nervous of how they would be received. 鈥淏ut everyone鈥檚 been really receptive,鈥� he beams.

Bruntwood鈥檚 Guest agrees 鈥� though he takes a pasting every time a Liverpool team plays Man Utd. 鈥淚 don鈥檛 follow it that intensely but that doesn鈥檛 stop me getting grief when we get beaten. I鈥檝e been giving it out a lot lately but I鈥檒l get it back with an extra 20% when the results change. Football is like a common language. People take football more seriously here but it doesn鈥檛 stop us working together.鈥�