Flex office demand in Manchester continues to surge 

The launch of Hana within Baring’s Landmark comes at a period of high activity within Manchester’s flexible workspace sphere with occupiers taking space and new operators eyeing a way into the market.

Hana, previously owned by CBRE but now under the stewardship of Industrious, took 32,000 sq ft at Landmark at the start of the year.

More than 40% of that space is earmarked for HSBC, which is due to move in before the new year.

For Barings, the decision to enter into a management agreement with Hana was about offering flexibility to potential occupiers and meeting a broad range of requirements.

“We’re not going to grant five-year leases at Landmark,” said Ian Mayhew, managing director of real estate asset management at Barings.

“If HSBC had knocked on our door and asked for a five-year lease with a break of three, we would have said no.

“But because we’ve got the flex operation, shorter-term agreements within the business centre are fine, so HSBC had the ability to come to a building that they wouldn’t have otherwise been able to have come to.”

HSBC is not the only big company to have gone down the flexible workspace route. Deloitte moved out of Spinningfields to WeWork-operated space this year, putting its search for a new home on hold during the pandemic.

Cinch has taken space at Orega in Arkwright House. Credit: Place North West

After its WeWork sojourn, it is understood Deloitte is now back out looking for a more permanent home, proving the usefulness of flexible workspace – instead of having to commit to a long lease at an uncertain time, Deloitte used WeWork as a stop-gap.

For Hana, the Deloitte approach is ideal.

“Companies are looking for that flexibility now,” said Stefan Duda, UK area manager at Hana.

“Our ideal is 12 to 24-month contracts. We see the demand being so high that once they vacate, we can then demand a higher yield on those units especially after the rates being agreed throughout the pandemic”

Choosing to go down the flexible route is becoming more common as companies learn exactly what it entails, but Duda admits it takes some companies a while to get their heads around.

“It’s a real mindset shift because companies have taken care of business rates, service charge, and the facility management for years. Having all of that taken away is a welcome break.”

Deloitte and HSBC were the trendsetters in Manchester.

Roku, under offer on 100,000 sq ft at Bruntwood’s Circle Square, has taken 10,000 sq ft of temporary flexible space at Hana’s other Manchester location at Windmill Green.

Cinch is another company using flexible space as a stepping stone to something more permanent. The used-car dealer has taken around 100 desks in space operated by Orega at Arkwright House.

Landmark is the ‘best building in Manchester’, according to Mayhew. Credit: via Space PR

The recent success of WeWork, Orega and Hana has emboldened other flex operators to take the plunge and open up in Manchester.

Gilbanks is reportedly eyeing around 30,000 sq ft at 11 New York Street, while X+why is in the market for a similar-sized workspace, with 100 Embankment in Salford rumoured to be one of the sites in the running.

Bold, part of NewFlex, has taken 13,000 sq ft at Bauhaus on Quay Street.

Flexible working, and all that it entails, could also play a role in enticing people back to the office following the pandemic.

“I feel a real responsibility for offering a product that will drive people back into the office,” Duda said.

“Anything that brings people back into the office from their homes is key for businesses because they see people being together, collaborating, and that brings innovation.”

Mayhew believes that Landmark, “the best building in Manchester”, is a shining light in demonstrating how the quality of workspaces can bring people out of their work-from-home funk.

“You’ve only got to look and touch and feel it to know that it’s premium quality. There’s a flight to quality that’s come out of Covid and we have not just paid lip service to the ESG agenda. We’ve really focused on that and the customer experience.”

Based on ongoing negotiations, Mayhew predicts the remaining 100,000 sq ft at Landmark could be under offer within the next few months.

We could well see rents exceed £40/ sq ft for the first time in Manchester. Landmark currently holds the record for the city’s headline rent, £38.50/ sq ft to Grant Thornton.

A full building with eye-catching rents is the dream for all landlords, and flexible workspace seems to be a major contributing factor towards realising it.