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Manchester’s Got Talent: How can PBSA and co-living help shape the city’s future?

Since establishing itself as the world’s first industrial city, to becoming a world-leader in the fields of education, innovation, creative industries and sport, Manchester has always performed on a global scale. The economy of the city continues to evolve. Therefore, the attraction and retention of talent is a core objective of Manchester City Council (MCC). In response, they have recently commenced consultation on proposals to amend existing planning policy relating to the provision of purpose-built student accommodation (PBSA) and introduce a new planning policy for co-living accommodation.

Mark Worcester, Director in our northern Planning team, highlights the main principles set out in the consultation documents and considers the impact on these burgeoning city centre markets.

Manchester

Internationalisation is firmly embedded in Manchester’s DNA and is fundamental to its continued success.

It is recognised as one of the the most competitive business locations within Europe, and its recent economic growth has been driven by large scale and rapid expansion of the research and development, creative industries and professional services sectors.

It has the largest digital and creative cluster in the UK, employing close to 64,000 people, and is renowned across the world for the quality of its research in health sciences.

It is also home to one of the largest student populations in Europe; a growing proportion of which are now international with undergraduates increasingly coming from countries such as China, Malaysia, India and Saudi Arabia. This large student community, and its retention post-graduation makes an invaluable contribution to the city’s economy, diversity and vibrancy, and is critical to Manchester’s continued growth in high value sectors such as advanced manufacturing, health and life sciences.

The city’s ability to attract business of global significance is inextricably linked to its talent pool. Attracting the very best talent from across the world to its universities and retaining that talent in the city requires, amongst other things, the provision of innovative residential accommodation in the places where people want to live, and the provision of flexible and social rental formats that meet the needs and desires of a broad demographic.

Planning policy for PBSA

Since 2012 MCC has sought to manage the supply of PBSA through the application of Development Plan policy: H12. During this period only a limited amount of PBSA has been developed or consented, principally within the city centre and within the Oxford Road Corridor. Unite Students’ New Wakefield Street development is one of the few to receive permission during this time.

During the same period there has been a fundamental shift in market conditions with increasing numbers of international students seeking higher quality accommodation within city centre locations and supply / demand becoming increasingly misaligned (both quantitatively and qualitatively).

Manchester has more PBSA beds dating from before 1990 than built since 2015.

The result is that the overall quality of PBSA in Manchester is reportedly poor and out-dated when compared to other UK cities with high numbers of students.

As a result, a number of students are occupying mainstream market housing in the city centre. This, it is suggested by MCC, is inflating rental levels for such properties and disadvantaging working households. As student occupation of such properties is council tax ‘exempt’, it is also affecting the council’s revenues.

In response to the above, MCC is consulting on the principles for an adjustment to Policy H12, which would allow additional PBSA to be developed in appropriate locations and in an appropriate format: in essence, the council proposes to allow more PBSA to be developed than has recently been the case, albeit still in a controlled manner. The key principles include:

• PBSA developments should be located within or immediately adjacent to the Oxford Road Corridor where it supports regeneration objectives. The only exception to this will be in the Eastlands Strategic Regeneration Framework area in support of the Institute of Sport proposals at the Etihad Campus. Such locations will include those in close proximity to the university campuses and public transport links where there is support for high density developments. 
• PBSA developments should seek to deliver accommodation across a variety of price-points. Particular emphasis is placed on the need for accommodation at the lower end of the price spectrum and the introduction of a requirement for 35% of units to be “affordable” to the Manchester student market.
• Developments will be required to demonstrate provision of high quality amenity spaces and a clear management strategy, which includes commitments to pastoral care ensuring the wellbeing and safety of students. 
• In addition to being sustainably located, new developments will be expected to contribute to the council’s zero carbon policies. Manchester has a commitment to be carbon neutral by 2038 and is promoting schemes such as the Civic Quarter Heat Network.

There is also recognition that existing PBSA sites in suburban locations may no longer meet the requirements of students in terms of location and facilities, and the potential need for such sites to be released for alternative uses is highlighted.

Planning policy for co-living

Co-living is an innovative form of residential accommodation which offers flexibility, community and, in some cases, an all-inclusive experience with access to high quality shared amenity spaces and curated events. It is well established in North American cities, such as Chicago and San Francisco, and in European cities, such as Berlin. Co-living pioneers, The Collective have delivered schemes in London and there is increasing appetite from operators to deliver their product in Manchester.

iQ is leading the way with Echo Street, the only consented scheme in the city presently under construction. Downing Developments and Select are advancing proposals for sites at First Street and St John’s respectively.

In response to the increasing level of interest, MCC is also to commence consultation on an interim planning policy for co-living which is intended to provide a framework for consideration of planning applications until a new Local Plan is adopted in 2023.

The key principles of the policy include: 

• A limited amount of co-living accommodation will be permitted.
• Co-living will be restricted to a limited number of key areas of high employment growth within the city centre and will only be considered as part of an employment-led, Strategic Regeneration Framework area, where it can be demonstrated that co-living would deliver “added-value” to the wider commercial offer.
• Applicants will be required to demonstrate that their proposals are supported by existing businesses or that it will attract specific employers / jobs if not already present. 
• Evidence of “need” and how a scheme will assist with the attraction and retention of talent and the meeting of regeneration objectives will be required. 
• Schemes will be expected to comply with Local Plan policy relating to the provision of affordable housing (equivalent of 20% provision unless justified by reference to a viability assessment).
• Occupation by students will be precluded. 
• Schemes will be expected to be zero carbon.

A number of principles around the quality of design and accommodation are also presented. These include the requirement for schemes to: comply with residential space standards, provide a mix of accommodation and have a clear operational platform and long-term management strategy. Interestingly, there is also a requirement for applicants to demonstrate how buildings could be re-purposed in the future, which is perhaps reflective of MCC’s caution regarding the longevity of demand for this new and untested type of accommodation.

Purposeful PBSA

The proposed adjustment in Policy H12 will be welcome news to providers of PBSA looking to identify opportunities in the city. For some time the commonly held view within the industry has been that Manchester is falling behind rival cities in terms of the quality and price competitiveness of its purpose-built accommodation stock and that, in turn, this could impede its ability to attract the best students in the longer term.

Whilst the restraints of Policy H12 are proposed to be relaxed somewhat, MCC will continue to control the location and quality of provision.

High quality schemes within the Oxford Road Corridor, which are well connected to the university campuses, delivered at higher densities (thereby making best use of the scarce land resource), have a clear approach to student support and wellbeing, include accommodation at the lower end of the price spectrum and deliver clear regeneration benefits will likely receive more support. The requirement to provide 35% of rooms at prices accessible to all under graduates could present viability challenges, however.

In our experience, product differentiation will also be a key consideration for future schemes; the potential for schemes to incorporate business work-space to support the integration of students and employers and the economic growth objectives for Corridor Manchester could be an approach worthy of consideration.

The proposed adjustment to Policy H12 clearly favours the provision of cheaper, more affordable accommodation to ensure that students with less financial resources are not precluded from studying in Manchester. Whilst this approach is to be welcomed, the need to provide sufficient purpose-built accommodation at all price points must not be overlooked if the city is to continue to attract the best domestic and international talent.

The case for co-living

Co-living is an innovative and exciting form of residential accommodation which, whilst still in its infancy, has a role to play in making city centre living more affordable to graduates, young professionals, project workers and others who contribute to the ecosystem of a demographically diverse international city.

It also has an important role to play in diversifying the accommodation stock in the city centre; providing choice in the type of accommodation available, flexibility of lease terms and an all-inclusive lifestyle. Co-living can also offer a familiar form of accommodation for graduates who enjoy the quality of accommodation and communality provided by PBSA and see renting a room in a shared flat / house in the suburbs from a private landlord as a step-backwards.

Given that co-living remains untested in the Manchester market, MCC has adopted a somewhat cautious approach to the drafting of its interim policy, which will no doubt be refined through the process of consultation.

The link to employment growth and talent retention is emphasised by the council, and one can see the sense in this. How this can be meaningfully proven and judged remains to be seen, however, particularly in a city centre context where all employment opportunities are within easy reach given its size. Prospects for schemes promoted in partnership with major employers are clearly going to be greater.

The requirement for schemes to comply with published residential space standards is likely to be an area of potential concern for prospective developers. Whilst the need to provide appropriate and liveable accommodation is accepted, co-living is a different form of accommodation to mainstream housing and the experience of operators in the USA and Europe suggests that residents are happy to accept smaller private spaces in return for higher quality, generously sized shared amenity spaces and an all-inclusive package.

As with PBSA, the required combination of affordable housing provision, high quality zero carbon design and other facilities may pose viability challenges to some schemes.

Whilst MCC’s cautious approach is perhaps unsurprising, as the product is presently untested in the city and many developers are exploring its potential, it will be important, in our view, to ensure that the supply of co-living accommodation is not overly constrained in the medium to long term. Doing so may leave Manchester behind in the race for talent. 

Contact Mark Worcester or Andrew Bickerdike for further information about PBSA and co-living in Manchester.

19 December 2019