MIPIM | Candour eyes growth in Manchester after US takeover

Four months after his company was acquired by American real estate behemoth Trammell Crow, the firm’s co-head of UK offices is in the market for more sites to boost its portfolio of best-in-class schemes.

Developer Candour was bought by Trammell Crow Company, a subsidiary of CBRE, in October last year as a vehicle for the US firm to enter the UK office market.

The purchase brought with it a pipeline of 800,000 sq ft of offices in Bristol, London, and Manchester.

The firm’s sole North West scheme is 39 Deansgate, a planned 200,000 sq ft scheme on the corner of the busy Manchester thoroughfare.

Candour co-founder Dan Rees, who is now spearheading Trammell Crow’s office efforts, sees Manchester as a key market for growth.

“When you look at Big Six [regional markets], you really end up looking at Bristol, Birmingham, and Manchester,” he said.

“They have got the liquidity and the scale and when you look at those three, the one that most is most investable from a capital point of view tends to be Manchester.”

Part of the attraction of Manchester is the city’s culture, Rees said.

“Culture attracts capital. Capital doesn’t attract culture. Where there’s culture, people want to invest. If you put a billion quid into Milton Keynes, you are still going to have no culture.”

Liverpool is another North West city with its fair share of culture, but Rees describes it as a “tricky” proposition when it comes to making appraisals stack.

“If we sat down and we did a little profit and loss on a site [in Liverpool] there is a very skinny appraisal, there’s not much fat in it,” Rees said.

Ask any office developer at the moment and they will tell you the market is tough. Changing ways of working post-pandemic have left the market in flux and the real value of offices unclear. Meanwhile, the cost of borrowing means many cannot get on site.

Trammell Crow’s acquisition of Candour came at a good time. It makes the funding issue easier to overcome and leaves the firm well-placed in a difficult market.

“We are getting better traction on stuff because because we’ve come to it as a capitalised developer,” he said.

Once interest rates settle, working from home “bottoms out”, and take-up becomes less lumpy and more stable, Rees is predicting a rise in rents and additional fat in those viability appraisals.

While many are wringing their hands over the state of the office market, he is bullish and on the hunt for sites capable of accommodating schemes of 100,000 sq ft or more.

In five years time, the aim for Trammell Crow’s new offices outfit is to be delivering two large schemes, or between 300,000 sq ft and 500,000 sq ft of workspace annually.

At 35, Rees is on the younger end of the developer age range and even in a testing market, he has a youthful hunger for the type of success he has heard stories about.

“You hear these great stories about these old developers that bought something for nothing and had huge success. Maybe this is our turn.”