City Regeneration Series: Episode 4 with Chris Darroch of Federated Hermes

In this latest episode in our City Regeneration PropCast series, Federated Hermes’ fund management director, Chris Darroch, speaks to our managing director, Andrew Teacher, about the opportunity for investors and the institutional appetite for long-term regeneration projects.

Darroch predicts the COVID-19 crisis will increase the value of quality – something which was already seeing traction pre-crisis.

‘I think there’s probably too many offices available in the provincial cities. Most of them aren’t fit for purpose. But residential values haven’t risen enough, or commercial values haven’t fallen enough to permit alternative uses to be introduced unlike in London or certain cities like Edinburgh perhaps,’ Darroch explains.

‘Our experience was tenants were not taking second-hand space, they wanted space to be refurbished to a good standard and be in a very good location, and they were trading up and prepared to pay more rent. I don’t see that trend diminishing. There’s a shortage of supply of Grade A space in provincial cities and there’s very little building and so I think that there is still a future in regeneration projects,’ he continues.

Darroch argues that creating a sense of place is key to success, especially on complex developments like NOMA, a 20-acre mixed-use neighbourhood in Manchester.

 ‘It’s about creating the sense of place and then introducing the right buildings into the mix. This approach has worked really well for us and we’re hoping to replicate that at NOMA where we currently have consents for three buildings,’ Darroch says.

Looking ahead, he believes there will still be investor appetite for “relevant assets” that have the right fundamentals: ‘Centrally located, best-in-class, business locations, they will remain highly sought after by investors in the future.’ 

However, to seize the opportunity post-crisis, Darroch warns that local authorities need to think creatively on how to harness patient capital.

‘Councils need to be a bit more proactive in how they look at their own cities and how they actually present themselves to the investment market in terms of getting things done. It’s really important to get the right people in place to deliver strategies,’ he concludes.


Chris Darroch

Fund Management Director

Federated Hermes

Andrew Teacher

Managing Director

Blackstock Consulting