The North West Evergreen Fund, “Evergreen”, has provided Allied London with a £10 million development loan to part fund ‘The Cotton Building’ in Spinningfields.
To complement this investment, the Greater Manchester Combined Authority (“GMCA”) also arranged for a further £5 million to be provided from its Growing Places Fund on a pari passu basis.
The Evergreen and GMCA investments will support the delivery of the innovative ten-storey commercial building in Spinningfields, which upon completion will allow tenants to completely customise their space, from lighting and heating elements to partition walls and furniture.
The secured financing will enable construction to take place on the entire development of the building with works expected to commence early June 2014. Completion is expected by the end of 2015, and will provide 160,000 sq ft of office space in Manchester.
The North West Evergreen Fund, which is made up of 16 local authority limited partners, was established to provide funding to support real estate projects, which is critical to the region’s economy, generating jobs and growth. It is capitalised through the European Regional Development Fund (ERDF) and other public money allocated under the Joint European Support for Sustainable Investment in City Areas (or “JESSICA”) initiative, which is managed by the European Investment Bank in the North West on behalf of the Homes and Communities Agency.
The Evergreen model provides loan funding to be invested in projects which will generate a financial return and will then be recycled back into the fund to help support further projects. The fund is advised by CBRE Indirect Investment Services Limited, the FCA regulated arm of CBRE, and co-chaired by Manchester City Council and Lancashire County Council.
The Cotton Building exceeded the development targets covering, remediation and floor space outputs and as such, was granted the maximum amount that the Evergreen Fund could provide.
Michael Ingall, CEO of Allied London said:
“Given the significant amount of investment, construction is now able to go ahead on what will be one of Manchester’s most exciting buildings.
“There is a real need to evolve the commercial real estate concept in order to support both fledgling and mature businesses, and provide the right environment for them to flourish, so the property world should adapt to the needs of fast-emerging businesses. Service, amenity and environment together with sustainability needs to be considered far more carefully than ever before.”
Set to complete in 2015, the building will feature a unique public environment, which includes subterranean parking for several cars along with a bike park and indoor gardens. The primary access route is by bicycle, via a ramp from street level.
Andrew Antoniades, Director of CBRE Capital Advisors, the fund’s investment advisor, added:
“The development funding market in the regions is changing at an exciting pace, and financing major city developments has changed dramatically over the last few years. We are seeing an increasing need for this type of complex, structured funding to ensure vital city regeneration projects actually get built.
“We are delighted to have been able to originate this loan on behalf of the North West Evergreen and Growing Places Funds. Spinningfields is a landmark development in Manchester, and is a fantastic example of true city centre regeneration, and will help cement Manchester’s position as one of the UK’s leading cities.”
Ingall added: “The Cotton Building will provide a graduated offer to create an eco-system of its own, with a fluid workspace culture at the heart. We will be looking to support SMEs, who can move up the building as their business grows. The large floorplates of the top storeys provide exceptional space for large corporates, creating an environment that will promote idea sharing and collaborative working.”
The building will be managed by hello Work, Allied London’s new property management service. hello is a concept that has been developed to provide a range of workplaces and infrastructure for the UK’s emerging creative and corporate organisations.
Four super-buildings in Manchester, Leeds and London will become the centrepiece for the hello concept and the planned super-buildings in Manchester will be the Cotton Building and the Bonded Warehouse.
Allied London believes these new super-buildings will establish a new asset class, for workspace. These buildings shouldn’t be compared to the traditional office building, as they will provide a range of innovative spaces for entrepreneurial businesses and be supported by a range of incubators, accelerators and corporate workspaces, creating complete ecosystems for start-ups and SMEs, right through to major corporations.
