(April 9, 2012) — One of the largest public sector pension funds in the United Kingdom has announced plans to design and construct office buildings in a regeneration area in the centre of Manchester, the country’s second city.
West Midlands Pension Fund, which has approximately £8 billion in assets, has tendered for an architect to design two office buildings in the Spinningfields area of Manchester.
The tender document, published today, says: “The project will be for the delivery of a predominantly office-based scheme in the densely developed core of Manchester, opposite Spinningfields, replacing in due course two existing 1960’s office buildings, Astley House and Byrom House, totalling some 150,000 sq ft net. The project involves the appraisal, design and construction of a highly significant complex expected to have a total usable area of approximately 250,000 sq ft net.”
The pension fund said it had agreed the venture with Manchester City Council and English Heritage and it would create premises to be used principally for commercial purposes, but with a retail offering.
The Spinningfields area of Manchester has undergone extensive development over the past decade and neighbouring city, Salford, recently became the northern home of the BBC, the UK’s national broadcaster.
“The fund’s requirement is for an architect with the experience, flair, expertise and resources to develop the strategic brief to a completed design which meets the fund’s institutional requirements, which attracts and secures the interest of the highest quality of tenant, securing detailed planning and conservation area consent and to tender the building works under a traditional, design led basis with a significant degree of specialist contractor design, on time, within budget and in accordance with European Public Procurement Rules,” the document continues.
Pension funds have been increasing their allocation to real estate since the onslaught of the financial crisis due to investors preferring a regular income stream from corporate renting.
The Towers Watson Asset Allocation Survey this year showed almost half of the global pension funds respondents were either modestly or strongly bullish on real estate going into 2012.
Direct real estate is becoming a growing phenomenon, along with infrastructure projects, as investors with sufficient funds are able to access the market and have better control than using a pooled fund.
The value of the architecture contract offered by West Midlands has been estimated to be £1million – £2 million and could last up to two and a half years.
The West Midland fund recently announced the shake-up of its senior investment team, which could see the departure of some of its most prominent figures.