What does it take to be a player?

If you’re doing business in Liverpool, there’s one question you’ll be asked again and again. Never mind your turnover, your experience, or whether you saw Corrie last night – the first thing anyone wants to know is: “Are you red or blue?” 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’s very much aware of the importance of the beautiful game. “The North-west is a hotbed of football. If the football’s doing well, there’s a spring in people’s step.”

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

Indeed, the city seems to be going all out to shed its reputation as the down-at-heel “our kid” 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’re hoping to emulate the success of Manchester’s Spinningfields or Birmingham’s Brindleyplace, but, this being Liverpool, it’s going to be bigger and better. The city’s 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’s 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 – as long as you know how to seize them (see box, overleaf). And those confident developers are even brave enough to assert that it’s credit-crunch-proof. “The difference in Liverpool,” says David Guest, Bruntwood’s regional director, “is that it’s starting from such a low base. You go into some of the property in the city and the quality of the environment – how can I put this tactfully? – 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’ll see that continue for some time, even if the credit crunch continues.”

Bruntwood set up an office in Liverpool in 2003, buying the old Littlewoods building for £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 “Sandcastle” over the road for £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 £80m first phase of the St Paul’s 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’s Square’s developer, hopes that all this will break the vicious circle of low rents that has stalled Liverpool’s property market for decades. “We want to lift the quality of office buildings so the city can start getting rents above £20 per ft2,” says Dan Needham, Muse’s development director. “Up to now, the rents would only support a certain quality of buildings, but without the buildings you can’t get the rents. This is the first time that Liverpool’s been on a level playing field with Manchester and Birmingham in terms of grade A office buildings.”

St Paul’s 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 £18 per ft2 before work started on site. Building two is also speculative but is now 40% prelet to DWF, another local law firm, and a major clearing bank at £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’s bolshie development community knows it can’t get projects off the ground without more inward investment. “We need to bring new jobs in, because Pall Mall is not going

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

Dan Needham, Muse

to get built on the basis of existing employers,” says Needham. “There’s still a bit of an attitude that people take secondary space in Liverpool – they take new build elsewhere but refurb here.”

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. “To get firms to base in Liverpool, you need to persuade them that both markets are big enough,” 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’s his job to balance developers’ ebullience and make sure that the most grandiose schemes don’t 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’t sure yet, but he is understandably concerned that such a scheme will destabilise the fragile city-centre market. “We want to encourage people to come back and live in the centre, and we’ve got to be realistic. So if you’re filling 23,000 homes, fine, as long as it doesn’t displace the market here. My question is, how can we make Peel's aspiration good for Liverpool?”

Lee has as much local pride as the next Scouser, but he believes Liverpool will never replace Manchester as the region’s hub and should be trying to provide something different. “I get cheesed off when people say we want to be the next Shanghai or wherever. They’ve 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’re a bit of an edgy city; maybe we’ll always be an edgy city …”

Lee may not want to compete with the Manchester juggernaut but there’s no denying the rivalry between the two cities. “I love Manchester, we’re not a big rival of Manchester really,” he claims, implausibly, then sticks his tongue out.

Many of Liverpool’s adopted construction professionals are from Manchester, and like Derek Walker, admit that they were initially nervous of how they would be received. “But everyone’s been really receptive,” he beams.

Bruntwood’s Guest agrees – though he takes a pasting every time a Liverpool team plays Man Utd. “I don’t follow it that intensely but that doesn’t stop me getting grief when we get beaten. I’ve been giving it out a lot lately but I’ll 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’t stop us working together.”