Ladies and gentlemen, it is good morning just about. A big welcome to Greater Manchester. It's been over 2.5 years, I think, since we had our last physical Capital Markets Day, so it's great to be able to bring so many people together, and I hope we've got a really exciting and illuminating day planned for you. Focusing of course initially on our Greater Manchester assets here at MediaCityUK and then at Mayfield. Talking about our mixed-use pipeline more broadly as well. Just a little bit of housekeeping to make sure I remember.
There aren't any fire alarms planned today, so if you do hear something, it is a real thing, so please head to the stairs either end of the floor we're on here. As I mentioned, the focus of our capital markets day today is our pipeline of urban mixed-use developments and importantly their potential for value creation in the years ahead. We will of course focus on our Greater Manchester assets here at MediaCityUK and at Mayfield, but you'll also hear more about the overall pipeline and its potential to add around GBP 350 million of development profits over the next five years.
You'll hear shortly from Colette O'Shea, our COO, followed by David Heaford, who heads our development function, and Vanessa Simms, who I'm sure you'll all know as our CFO. We'll then have a brief overview of MediaCityUK itself, before we then embark on a tour of MediaCityUK. For that tour, you'll all have been allocated to one of three groups, and that's indicated by a number on your name badges, but we'll come back to the logistics of that a little later. From here, we'll then be taking the tram across to Mayfield, which is adjacent to Piccadilly Station, where many of you, most of you will have arrived this morning. We'll have some lunch there and then hear from the team at U+I about our plans for Mayfield.
As a brief reminder, we launched our strategy at our last CMD, and that was held virtually in October 2020, and it sees us focus on three key areas, Central London offices, major retail destinations, and mixed use urban neighborhoods. What binds those three things together is the importance of a sense of place to their long-term enduring success. Each of those three areas is grounded in our core purpose, sustainable places, connecting communities, realizing potential. Each of them is based on a clear, sustainable, or attainable competitive advantage. We have really good momentum in every part of the business. In London, we're seeing a really encouraging return to the office. Utilization last week was back up to around 50% of pre-pandemic levels, and we're seeing week-on-week materially increases in occupancy.
Now more importantly than the utilization itself is that's reflected in positive leasing activity. As you may have seen, we announced last week, we've recently signed 11 new deals totaling 200,000 sq ft, and we expect another 200,000 sq ft to be signed before the end of our financial year in March. We expect that leasing evidence to be firmly supportive in terms of terms and rents. We've got an attractive near and medium-term development program. We're continuing to actively recycle capital out of assets with limited further value creation potential, and we have a program which will keep Landsec at the forefront of the green agenda. In retail, clear signs of rents and values stabilizing, investor activity returning to the sector, including our own acquisition of a further 25% stake in Bluewater that was announced just before Christmas.
As we said, with our interims, vacancy across our retail estate fell from 8.8% at the start of the year to 7.5% at the half year. Across 181 new lettings in retail, we were on average 3.3% ahead of ERV, and we expect to be reporting similarly positive data at our full-year results in May. In mixed use, as you will see today, we have materially accelerated our strategy with our investments at MediaCityUK and in U+I. We now have a pipeline of projects which could contribute around GBP 350 million of development profits over the next five years.
As a result of the healthy momentum in all parts of the business, we now have a clear view of the potential returns that each area can generate. Now, with a similarly clear view of the risks involved in each area, this means that we can make clear-eyed decisions about capital allocation, confident that those decisions are and will be value accretive. The chart on the right-hand side here, which we first produced with our interims, back in the autumn, shows the range of potential returns that are available to us across each business area. As we said at that point, overall, we are aiming to deliver a mid-to-high single digit annual return on NAV through the cycle, and that's split broadly equally between income and growth.
Now, of course, a key element of our strategy is the effective recycling of capital into areas that offer the best risk-adjusted prospects. At our last CMD, we identified a medium-term target of around GBP 4 billion of disposals in the medium- term. Since then, we've already sold around GBP 900 million, and we've invested about the same in new opportunities across all three areas of the business, while also progressing our preexisting London development program.
As a result of that, we've already begun to see a change in the composition of our portfolio, as shown in these charts, with urban mixed use now accounting for 8% and London reduced to 64% from 69% at the half year. Our medium-term expectation remains that London will represent somewhere between 55%-60% of the portfolio in the medium- term, while each of retail and other mixed use will be around 20%-25%. You should expect to see ongoing capital recycling in 2022, with the effective matching of disposals and reinvestment of proceeds, a really important priority. After those few brief introductory remarks, I'm now going to hand you over to Colette. Thank you.
Thank you, Mark. For those of you I haven't spoken to yet, good morning, and it's great to see you all in person again. Mark's talked to you about how mixed-use urban neighborhoods are core to our strategy. I'm going to take you through how we intend to make the most of the opportunities in this sector to create value and drive growth. We believe the opportunities are significant because they're supported by structural trends which are changing city centers. People want to be able to live, work, and play within neighborhoods. The idea of localities being reserved for single uses, as we saw with high streets and shopping centers, is now a thing of the past, and we think that's a good thing. It means we're going back to a world of proper town planning of neighborhoods, districts, and cities.
Last week's Levelling Up White Paper provides political support for our activity, with both Greater Manchester and Glasgow a particular focus of the government's plans. Of course, we're seeing a huge shift in how we prioritize where and how we live. People want a sustainable future where quality of life, health, wellbeing, environmental sustainability are paramount. The tide was turning ten years ago, but the pandemic has put it on steroids. Getting this right means we'll be a partner of choice for public and private sector organizations who hold the key to unlocking acres and acres of potential. This means we can create and curate the places and spaces people want to be in, which in turn will unlock strong returns for shareholders. Let's focus for a moment on those returns.
As you've heard from Mark, we're targeting a mid- to high single-digit IRR across the portfolio. This captures an attractive mix of income and development upside. These returns are both attractive and have a balanced risk profile for three reasons. The portfolio's mixed-use with a good balance between offices and residential. It has a good geographic spread, and the phasing enables us to control capital recycling and adapt plans to create even greater returns. Our acquisitions mean that we can scale up, accelerating our ability to deploy capital into this part of the business. We've doubled the portfolio, so it now represents 8% of the whole and have line of sight to grow this to 20%-25% in the medium term.
We've more than doubled the square footage to 9 million sq ft, with the potential to deliver 7,000 homes, 3 million sq ft of offices, and 1 million sq ft of retail and other uses. We have five projects, two of which are ready, virtually ready to start on site. We've rebalanced the residential to office mix and broadened our geography to Manchester, a very attractive market. As you can see from the bar chart on the right, we're now planning to invest GBP 1.5 billion over the next five years. With an expected profit on cost of around 20%, you can see from the graph how that's increased potential returns. Plus, we're doing all this while carrying a book value of around GBP 900 million, which is generating around GBP 58 million of income. A decent return while we prepare for development.
Now to the individual assets, starting with MediaCityUK. There are three primary reasons why we were attracted to this asset. Firstly, it's already established and is Europe's largest purpose-built creative tech and media hub. Secondly, it gives us both secure income and access to future growth with its development potential, a really attractive combination. Thirdly, we could see the benefits of taking a 75% stake, gaining the proven market and development expertise of Peel, who've owned the site since 1987. Phase One is 96% let, with GBP 23 million of income reflecting a yield of 5.8%. The WAULT is 10 years. All in all, a great set of numbers. That's Phase One, the stabilized assets and secure income. Phase Two is the growth opportunity. It comprises 15 acres of development land.
We have outline consent for 1.7 million sq ft of residential and commercial uses and plan to be ready with a 270,000 sq ft office building that could start at some point next year. Consent was obtained in 2016. Since then, the development environment in Greater Manchester has really moved on, so there's an opportunity for us to adapt the scale and massing of future phases. This then brings me to the U+I deal. This was very attractive to us for similar reasons to MediaCityUK, as it means we can materially accelerate our plans. Firstly, it's given us immediate access to two highly attractive developments, one of which is Mayfield in the heart of Manchester. In our eyes, one of the most exciting regeneration projects in the UK.
Secondly, it's brought us leading front-end regeneration expertise, as well as broadening our geographic spread. Thirdly, it's given us future growth potential via several other sites. Let me take you through the numbers. We acquired U+I for GBP 269 million, and we'll sell around GBP 200 million of assets that are not core to our strategy over the next two years. This effectively means we acquired the five core assets for between GBP 60 million-GBP 75 million, well below their collective market value. As you can see, the development profit we expect over the next five-six years is significant compared to this price. Taking these factors together, the U+I acquisition gives us an expected IRR of between 11%-14%. I'll now give you a very brief overview of Mayfield, which we're going to later.
I'll go through the two assets we've identified for future growth, namely Greenwich and Cambridge, and then Liberty of Southwark, an office development in London. Starting with Mayfield, it covers 24 acres next to Manchester Piccadilly station, and as I said, is one of the best regeneration opportunities in the U.K. Mayfield was historically a station and its depot buildings, which you'll see, will be retained to preserve its railway heritage. Its future will be carefully planned. 2.5 million sq ft of mixed use that is anchored in history and community. It will include the 6.5-acre park, the first to be built in Manchester for over 100 years, all of which will breathe new life into the area.
We're getting 300,000 sq ft of offices ready in two buildings that could start later this year, as well as completing the park, which you'll see is well underway. Back to London and Morden Wharf in Greenwich is 19 acres right on the River Thames, owned by Morden College. U+I, as development manager, achieved a planning resolution last year for 1,500 homes, plus warehouse and commercial space, and the Section 106 is now being negotiated. Cambridge North Fringe East is 120 acres on the outskirts of Cambridge in a joint venture between Cambridge City Council and Anglian Water, with U+I acting as development manager. While we're at feasibility stage, it's looking like it could become a new district of around 5,000 homes, + 500,000 sq ft of life science, office, and lab space.
Finally, Liberty of Southwark is five minutes walk from London Bridge and Borough Tube station. A 160,000 sq ft office building, which will be net zero, makes a cracking addition to our office portfolio. The site's in joint venture with TfL, who are the freeholder, and we're in the process of agreeing the terms of a funding agreement with them, as well as getting ready to start on site later this year. In a nutshell, our acquisitions of MediaCityUK and U+I have really stepped up our game in mixed-use urban neighborhoods on all fronts. I'll now provide a very, very quick update on the schemes that we already had in the portfolio. David is going to take you through O2, so I'll focus on Lewisham and Buchanan Galleries.
It's interesting to note that all three of these are secondary shopping centers that have great regeneration potential. Lewisham is adjacent to the Lewisham Gateway regeneration project, which will deliver thousands of homes, and our proposals are seen by the local authority as a natural extension of that. We're evolving plans for 1.8 million sq ft of a residential-led scheme, and expect to submit a planning application in the next 12-18 months. Buchanan Galleries in Glasgow is a tired shopping center connected to Queen Street Station. The site comprises 8 acres, and we've developed an office-led scheme of just over 1 million sq ft. Phase one is likely to be around 400,000 sq ft of offices, and we're planning to start on site with enabling works in 2023.
We've significantly increased our pipeline and now have five schemes delivering returns in the short-term. We can now deploy around GBP 4 billion from next year. We expect to achieve a yield on cost of between 5.5% and 6% for the London schemes and 6.5%-7% for the regional ones, and deliver a profit on cost of around 20%. As you can see, we're making mixed-use urban neighborhoods a significant part of the business. To show that in even more detail, looking at the left-hand chart, you can see how the GBP 1.5 billion will be invested across the five schemes over the next five years.
The right-hand chart shows how this investment, along with our expected profit on cost, increases the total development value from around GBP 900 million in March to close to GBP 3 billion in five years' time, in line with our target to grow this part of the business to 20%-25% in the medium term. As Mark said, our strategy is focused on three things, central London offices, major retail destinations, and mixed-use urban neighborhoods. What binds them together is our total commitment to the importance of creating great places that will inspire communities, leading to the transformation of whole neighborhoods for the long-term, as well as unlocking value for shareholders.
We have many of the skills necessary to do this, but U+I are well known for their visionary and placemaking expertise, and these will complement our existing strengths as we maximize the opportunities in our larger, faster program. As you'd expect, sustainability in its broadest sense, from community to net zero, will drive our decision-making. In conclusion, we have a clear plan to unlock returns early, starting this year. We have an attractive balance of risk return to enhance our target returns. We have a phased delivery plan to enable us to manage our capital recycling and speculative development exposure, and now have a clear pathway to grow our urban mixed-use neighborhoods to around 20-25% of the portfolio over the medium term.
With that, now let me hand you over to David Heaford, who's going to give you some more detail on O2 back in London.
Thank you, Colette O'Shea, and good morning to you all. As Colette O'Shea said, we really are motoring with our mixed-use urban developments. Before you let out into a sunny-ish Salford, dry at least, I want to take you back to London. Specifically, let's go back to O2 in London. Now that's O2 Finchley Road, Zone 2, not O2 Greenwich. There's no Strictly Come Dancing shows at our O2 center. Now, I shared some of these plans for O2 at our last Capital Markets Day, which was autumn 2020. Seems like a lifetime ago. A lot has happened since then, and if you're anything like me, 2020 and 2021 are a complete blur.
For those of you that may have been there, as a reminder, it was the virtual capital markets day, where we were probably sat at home in your slippers and pajamas, at least from the waist down, watching from your home office. I shared this video. The site is sandwiched between stations, West Hampstead and Finchley Road, two tube lines, the overground line, Thameslink, and so many bus routes. You can't really get any more connected. There are already very well-established, thriving communities at each end of this site. The rental tone is well and truly set. Let me navigate you around this site as it stands today. Starting with the shopping center highlighted in purple, anchored by a large Sainsbury's. Lest we forget, these local convenience-led retail centers have weathered the storm well through the various lockdowns and variants.
The center also has a Vue cinema and a Virgin Active gym, both of which are rapidly filling up again. We're finalizing plans for these to be joined by Aldi's new convenience concept, and on the first floor, new F&B offerings, a Pan-Asian restaurant, a net zero carbon pizza offering, and a salt beef diner. Camden Council have also chosen the O2 to house their tech academy, a training center specializing in robotics and app-building for any budding students in the local community. Then we have the large car park that, despite only being at ground level, is simply much bigger than it needs to be. At the other end of the car park is a rather tired Homebase. Those three parts, the center, car park, and Homebase, collectively are under our current ownership.
We're working through plans to take ownership of the car showrooms and then the builder's yards leading down to West End Lane, shown on the left. Well, since autumn 2020, we've been really busy, and I am very pleased to say we've done exactly what that opening video told you we would do. We've now submitted planning application for 1,800 homes across this 14-acre site. In total, the scheme has 10 plots, 7.5 acres of public green space, and 180,000 sq ft of convenience-led retail. With enabling works planned to start at the end of this year, we have an earliest PC date of Q1 2026. The planning application is broken into 3 phases. A detailed first phase and then outline plans for phases II and III. We will start within our existing ownership at the Homebase end of the car park.
The current shopping center remaining car park stays open for business. The total development cost for phase one is around GBP 250 million and includes over 600 residential homes. Now I'll expand on that in a moment. We move west, down towards West End Lane and the West Hampstead stations. Here we have the ability to deliver 350 more homes across a further three plots, with a total development cost of around GBP 200 million. Finally, we move east, taking down the existing shopping center for the third and final phase. Here, we have the ability to deliver another 850 homes across four plots, with a further GBP 500 million-GBP 600 million of development costs, ultimately creating a green and open new urban neighborhood. Let me show you phase one in a little more detail.
As I said before, we plan to start enabling works later this year, and with 608 residential homes across three plots. There is also 1.5 acres of green space in phase I. The existing rental price points in Finchley Road are on average GBP 1,600 for a studio, up to GBP 3,500 for a three-bed flat. It's clear that O2 offers a very attractive income profile. This is a highly desirable location, benefiting from fantastic schools, both private and state. The public transport connectivity is exceptional into Central London, and the major motorway network is within a 10-minute drive.
We are busy working up our first residential rental proposition and product with a target build cost of GBP 265 per sq ft, which we intend to launch ahead of the PC of the first blocks. Now we'll be bringing all of our sustainability experience from London offices to bear on this scheme. We were recognized last year for achieving the first net zero development in the country. That's our The Forge development in Southwark. We've now also been recognized for designing the most efficient building in operation, the sustainability credentials through its lifetime for the building, and again in Southwark, and again, a first in the UK. Timber Square will have a five-star excellent rating when complete, and we hope to start the main build later this year. All of this knowledge will be applied at Finchley Road. That's phase I.
These multi-phased schemes offer more flexibility and the ability to balance income and capital returns over the long-term. As this chart shows, the existing shopping center stays intact and operational for a long time, generating income. With planning permission expected to be granted within the coming year, we'll start to see capital returns flowing. We then deploy capital into phase I and begin marketing through to first phase PC at Q1 2026. Incoming capital flowing, we repeat the same for each of phase II and III, with the ability to throttle phases and plots within each. In the third and final phase, we demolish the existing shopping center and complete the master plan. Capital and income return are delivered throughout as we transform the entire site. Owning such a major site enables us to deploy capital into a known entity where we're in control of the place.
We have a deep relationship with the council and where we are connected to the local community. Real progress at Finchley Road with a fantastic return profile. We are really excited about this scheme. Thank you. I'll hand over to Vanessa before we let out into sunny-ish Salford.
Thanks, David, and good afternoon. As you can tell, activity across our business has stepped up quite significantly in the recent months, and that's really there to enhance our future returns. I've got a few slides here today just to bring this together. As Mark shared earlier, we have a total return business, and we are seeking to deliver a mid- to high-single-digit annualized return on our equity, and that's split broadly between equally between both income and capital growth. Our development program, including the urban mixed-use schemes that you've seen today, materially advances our future returns. CapEx over the next five years will be broadly GBP 2.8 billion, and we expect to deliver a 20% profit on cost from this investment.
We'll fund this activity through our disposals, recycling the capital out of lower yielding assets into higher return opportunities and allocating capital to areas of growth. I expect our LTV to be below the mid-thirties in the future. Our pipeline of development opportunities is now attractively balanced between both London offices and the urban mixed use. Today, we focused on our urban mixed use schemes. We've also added the Liberty of Southwark to our London office development pipeline, and that's following the recent acquisition of U+I. The Liberty scheme adds to our existing opportunities within Southwark. Planning is in place, and we expect to start on site later this year. Total development cost for the scheme is around GBP 225 million, and we expect to deliver a development yield of 6.3%.
If occupier demand remains strong, we'll also expect to start on site at Timber Square later in this year. The indicative cost of our future pipeline of the London office developments is around GBP 1.3 billion. Our future pipeline of London offices and the mixed use includes the recent acquisitions, and this has increased significantly, creating investment opportunities of over GBP 5 billion for the longer term. We'll fund this through the recycling of our assets. At the 2020 capital markets day, we shared a target to sell GBP 4 billion of assets to fund our growth. To date, we have sold GBP 880 million at 5% ahead of the book value.
We plan to dispose of a further GBP 1.7 billion of London offices, where you'll know that the investment demand at the moment is strong, and GBP 1.3 billion of subscale assets over the medium term. We have flexibility around the timing of the future disposals to align the quantum and the timing of investment activity. This allows us to maximize the value from the assets that we intend to sell. Both the retail parks and our leisure assets have seen a strong performance over the first half of this year, and we're expecting this to continue. Our disciplined approach to capital recycling enables us to maintain a broadly net debt neutral position throughout the cycle, and it protects our income.
As our operational risk increases to achieve the higher returns, we will manage our financial risk accordingly, so keeping our net debt broadly neutral and limiting the speculative development CapEx to around 10% of our balance sheet's gross asset value. Our development program will provide a regular flow of completions, and this will be a source of both development profits and our future income growth, starting in the first half of the next financial year. This slide illustrates how the phased nature of the urban mixed use schemes complement our London office program. With the first phases of both MediaCity and Mayfield planned to complete in the second half of financial year 2024, 2025.
To summarize, today we have shared how our urban mixed use neighborhoods will deliver a positive impact on capital returns and income, contributing to our aim of achieving high- to mid-single-digit annualized total returns through the cycle. These schemes are phased, and they enable us to provide both balanced and constant returns through the cycle of each of the schemes. That phasing also enables us to dispose at the right time accordingly. It enables us to maximize the value of those assets that we sell to fund our investment activity. The yield differential between our disposals and our investment activity will drive a significant growth in our income. This chart indicates that its likely impact on income of the net investments over the next five years.
As you can see on the chart, there is potential for us to grow income by over GBP 100 million through our capital recycling while maintaining net debt neutral, and this excludes any like-for-like rental growth assumptions. In summary, we're in a strong position to grow our total return and income and maintain a strong balance sheet through the pipeline of opportunities that we have created. Thank you. I'll hand back to Mark for the Q&A at this point.
Thank you very much. Now the rest of the day after this session is gonna be very much focused on the Greater Manchester market, our investment here at MediaCityUK, and then at Mayfield. What we thought we'd do is just pause briefly at this point. We've tried to share an update there of our wider other mixed use program. I'm gonna ask the speakers just to come back on the stage briefly. We've probably got 10, 15 minutes or so if there are questions around the wider sort of mixed use strategy, if you like. I thought we'd just try and separate that from some of the questions we'll have later, I'm sure, around the Manchester and Salford markets. Chris, first, and then I'll come to Mark just here.
Oh, we do have microphones. Forgot to say that, sorry.
Hi. Hi. Good morning. One question was on residential, and the other question was on the phasing of disposals and acquisitions. I think you had said you're funding the CapEx with the disposals, and I suppose the question was, how much are you... I can see how that creates net debt neutrality. Are you also trying to manage income neutrality? You're avoiding selling income until the income is secured and going to come through. If you could just clarify that, please.
Sure.
The second bit was just on residential. There's clearly a lot of residential
in there, in the development pipeline, is it build to sell or is it build to rent? Is there a residential rental business starting to grow here, or are you gonna just do that sort of capital rotation build to sell?
Cool. Okay. Thanks, Chris. I'll make a couple of general comments around the capital recycling approach, and then perhaps ask Vanessa just to add a little further to that. As we've said, and certainly said back at the time of the interims, we are very much focused on making sure that we can match the inflows and outflows as best we can. I think what we've done over the course of the last 12 months shows, you know, whilst that's not necessarily that easy to do, we have been able to do that thus far. We certainly have a mind to the income impact of that, but we're not gonna slavishly be trying to precisely match the income.
What the acquisition here, for example, the investment here showed, is the ability to buy into mixed use where there is income. We certainly would always have to take that property consideration, but we're not slavishly trying to match. I mean, is that fair, Vanessa? Anything you'd-
I think-
you'd add?
Yeah. Yeah. Probably fair. I also sort of shared that we're looking to align our LTV, so that we expect, given the plans that we have in place, to have that probably below the mid-thirties% as well as we go through the cycle. Of course, there will be some ups and downs along the way 'cause it's not precisely timed, but that would be our aim.
Cool. On the residential question, both Colette and David have been involved, I think over a number of years in terms of debating and considering residential for us. I just a couple of general points, and again, I'll ask then Colette and David if there's anything to add. I think we like, in principle, the idea of being able to build a core income stream from build to rent over time. We feel we have time to look at how we design, procure, and ultimately operate within that space. Of course, we've got to think through what scale of activity is required in order to be efficient, and how do those returns work. I think we have an aspiration and an intent to build a build-to-rent portfolio.
That doesn't mean everything here is going to end up being, you know, default build to rent. It could be that to get the right blend and mix of what we want to achieve in a particular location, or to manage the amount of capital tied up or the returns, that we could look at some mix of build to rent and build to sell. But I think we do have an intent and time to turn it into reality, to build a residential capability. I think David or Colette, I think that's fair.
Yeah. I think the only other thing I would add is, one of the points that I made was about the phasing. Once you get your planning consent, actually, you have a lot of flexibility because you get planning consent for resi building. Then what the actual, whether it's build to sell, build, you know, build to rent, or whether you choose to sell it gives you plenty of options at the point that you need to make your decision. This is one of the great attractions of having phases across all of the projects that we've been talking about this morning.
Okay. Cool. I think, Mark, we had a question in the middle here.
Thank you. Very good morning. Only one question from me, which is about sustainability, which is a main topic right now in, especially in London. How do you think everything you're gonna invest in the next 10 years is gonna move, the proportion of your portfolio, which is currently certified, if I'm correct, your starting point is about 44%. What sort of target should we assume in the next 10 years in terms of certified buildings? That's the first question. The second question around this is, if I'm correct, you don't have any outstanding BREEAM building right now in your portfolio. Is there any intention from this CapEx to move that 0% to a certain level?
Yeah.
Thank you.
With respect to the overall carbon efficiency of our portfolio, and of course, at the moment, things are primarily measured by energy performance certificates, EPCs, and there's a requirement to get to Grade B. I guess that's what you're referring to in terms of the percentage at the moment. I mean, that's primarily a feature of our Central London office portfolio. Alongside the interims, we talked about GBP 135 million investment between now and 2030. What that does is keep us on the correct pathway according to the Science Based Targets initiative for us to be able to make our contribution to limiting global warming to 1.5 degrees. Our focus has been on that rather than EPCs.
What the EPC rating, et cetera, or the BREEAM rating may be, 'cause there are so many different ways, and I think this is evolving quite quickly in terms of how buildings are rated. For example, EPC is a design standard, so it is a theoretical energy performance of the building based on the design. It is very different to the energy in use of what is actually being emitted and used in terms of energy. Our target is to reduce our energy in use, which will be more significant than the design requirement to maintain that 1.5-degree pathway. That will, by extension, have everything graded EPC B or better by 2030. I stress that wasn't our objective, was not just to keep up with regulation. Our objective is to stay on that pathway.
Now, that net zero for 2030 is all of our Scope 1, Scope 2. It's 11% of our Scope 3. The biggest proportion of really getting to true net zero as a society ultimately is going to be how we tackle the Scope 3 emissions, and that's where we look at embodied carbon. Everything that we've designed since 2019 has been designed to be net zero, but that would include specific offsets. There'll be a huge amount more work to do to reduce the embodied carbon in development. I think that will go well beyond anything being BREEAM Excellent, BREEAM Outstanding. We're certainly supportive of and have signed up to a number of things that would ultimately see the amount of embodied carbon in new development being capped.
I think we will see regulation around that area in due course. I feel we are at the forefront of what's going on on greening, but we mustn't kid ourselves that GBP 135 million investment fixes everything by 2030. There's a huge way to go. It's an area that we, not just financially, but in terms of resources internally as well, continue to focus on significantly. You'll hear a bit more about the sustainability credentials of the assets here and the development plans here later on today. Were there any other. I see a question from Max here. Just
Thanks very much. Just a quick one to kind of follow up on the resi side of things, and you talk about the flexibility that you have in that planning there. How much pressure, and thinking about leveling up and all this kind of side of things, do you have in terms of affordability? Do you expect that to increase in the years as we move forward into these developments? How that kind of impacts your returns in terms of how much affordable housing you have to produce?
Colette, maybe.
Yeah, I mean, there's definitely a lot of pressure on getting that right. What I would say is that we're now sort of facing a world where there's much greater flexibility in terms of the affordable component as to exactly what it is. Whether it is affordable rents, whether it's social rented. A lot of it depends also which boroughs you're operating in, because, you know, we need to get the mix right to meet the needs of the individual boroughs. There's quite a lot of dialogue to really, you know, get that right. It's not something that we feel we should be pushing back too hard on.
We feel that the scale of these projects and what we're trying to do in terms of embedding these in the community, we don't feel it's about, it's a numbers game, particularly with the local authority. We are very much trying to work with them to meet their particular needs. It's quite interesting, you know, if we were talking to the politicians last week up here in Manchester, there's quite a lot of demand for maybe more family housing, and then in O2, well, the criteria will be slightly different.
The main thing is really about the flexibility, and as I said, it comes back to, as we come to pressing the button on each of the phases, we still have plenty of time to be able to change mixes, adapt the buildings, so that we can continue to meet the needs of the community and the needs of the local authority.
Yeah. I mean, I would just add to the scale point that Colette made. If you've got O2 as an example, 1,800 homes, and that council's overall affordable housing targets, we obviously can deliver a very significant absolute quantum of that, and that obviously plays to our favor as we work through the details.
Yes, I think you probably saw earlier a 35% affordable provision as part of the planning submission at O2, which would be GLA compliant, probably below what the borough would aspire to in percentage terms. As you say, the absolute quantum of what's being delivered there is pretty significant. I think we're probably ready to move on at this point. Obviously, we're around and about for the remainder of the day, so anything that has come up, please of course, feel free to find any of us during the sort of remainder of the tour. I'm now gonna hand over firstly to Phil Davis from Landsec, and also Stephen Wild from Peel, who looks after Media City here. From here, very much focusing more on the Greater Manchester assets.
Phil, I'll hand to you.
Thanks, Mark, and good afternoon, everyone. I'll be joined by Stephen from Peel, and we'll talk you through the exciting future for MediaCityUK. Before we do, I'd like to take a step back and just reflect on what attracted us to Manchester. Manchester is a winning city. It's the fastest. It's the largest and fastest U.K. regional city, and it's also a European center for digital tech. Outside of London, it's the largest office market in terms of stock, take-up, and capital markets, and it's the most mature build-to-rent market. It has the key ingredients of success. It enjoys political support and should benefit from the leveling up agenda. It has a young demographic and a deep pool of talent. With the exception of London, it has the largest student population in Europe with a high graduate retention rate.
It offers excellent connectivity with a Metrolink link in the city and direct trains to London in just over two hours. HS2 will both increase capacity and shorten journey times to London and Birmingham by half. Manchester is also served by the U.K.'s third busiest airport. I'll now hand over to Stephen to take you through one, phase one, and then I'll come back to talk you through phase two . Stephen.
Right. By now I think you know I'm Stephen Wild, Managing Director at Media City. This is the first time we've hosted a capital markets day with our new partners, Landsec, and so we welcome you all. I hope if we get out before the rain starts, we can have an interesting, enthralling day, for you. I think I've been asked just to give you a quick whistle-stop tour over what we're trying to achieve here, and where we are. I think I'm slightly old school, so I will try and multitask and keep the slides going, but do forgive me if not. I thought I'd just touch on first the partnership side, 'cause it's extremely important to us. Some of you may know Peel, some of you may not know Peel.
We are a family-owned private enterprise. Strong asset base in property and infrastructure, predominantly along the northwest. And we'll touch on our expertise in a second, there. I think interesting, this is our fiftieth anniversary this year of basically being a partner of choice for changing the landscape of property and transforming that. When you overlay that with the development of placemaking skills and financial power of Landsec, we personally think this is a really formidable partnership, and I think Phil's gonna touch on later how we, this will accelerate through the vision that we've had for some time now. We feel our local knowledge teamed up with the skills of Landsec will really push this forward. We've been trying to build, and we have been building a creative and digital cluster for some time now.
10 years we've been at it. I've been here that long, I'm afraid to say. This will accelerate that and come through. Placemaking, we'll touch on as we go through. Phenomenally important to it, and those inclusive events will really deliver the place and the differential that we're looking at. Sustainability, obviously, we've just heard quite a few questions. It's completely embedded in what we do here, and we'll touch on that later. Workspace of the future. We've seen some massive changes over the last couple of years. We're keeping pace, and I think you will go out afterwards and see some of that as well. Before I go into a little bit more detail, as always, you have to have a bit of a film and video. Sit back and enjoy this for a quick minute, if that's okay.
All amazing places always have a great backstory, and we actually sit here on the banks of this Manchester Ship Canal which was constructed by some of our forerunners linking Liverpool to Salford and Manchester in the Industrial Revolution. Interesting, what we are seeing now is the next industrial evolution. Innovation in digital and technology is happening here. A lot of our occupiers are very, very active in that, and we'll touch on those in a second. What's happened here? It was touched on that we've owned the sites in Salford Quays since the late 1980s. Actually, there was a big catalyst here in about 2006 when we had long discussions with the BBC.
Not about just building the BBC an office building, but about moving the BBC into a new environment for these businesses that could grow and aspire to grow and move on. Partnership's very strong with us. Salford City Council and the BBC and ourselves brought this vision for the purpose-built tech and digital hub that we see today. It's important for the BBC. This is a long-term home for them. The commitment is significant. There's over 4,000 people working at the BBC now, and some of their leading-edge content comes from here. We're gonna go in the studios afterwards and have a quick word there. The Olympics comes from here. The leaders' debate for the general elections come from here. This is
Not only have we seen good lease lengths, which have been picked up on before, but actually that commitment is really strong. The faith BBC showed with us soon saw ITV join us, and we started to see that creative and digital cluster starting to grow there. Talent, we touched on that slightly earlier, is massively important. The University of Salford soon followed, and you'll be near the building where the university are shortly. Today, clustered around these anchors, there's 250 burgeoning enterprises which call MediaCity their home. There's 8,000 employees. It's not just broadcast, interestingly. Cyber security, e-commerce, e-gamings. We're seeing all these digital businesses evolve here. We've also obviously got residential here. There's more than 2,000 people who now live at MediaCity, as well.
What have we built? This is a plan you'll see a few times, I think, today. To make it easy between Phil and I'm talking about the pink bits, Phil's talking about the blue bits. He'll touch on those bits. That is the master plan focused around this large central plaza, where it's got the Van Gogh Alive exhibition at the moment, which some of you will wander past, no doubt. What have we built so far? The 37.5-acre site, we have constructed 1.7 million sq ft in the last 10 years. We sit in a state-of-the-art studio at the moment, the most advanced studio block in Europe. You will go round that. There's nine office buildings. We're gonna go in one of those in there.
We continue to invest in those to make sure that workspace actually is appropriate, as well. The residential, 2,000 people live here. Car parks, hotels, and the ancillary places. All that environment that's needed to make this a really truly sustainable place. We've touched on the number of entities that are here as well. We're not just office space. We're the home of the BBC Philharmonic Orchestra. Immersive entertainment, fantastically important to it, and this is a visitor destination, as well. What makes it so great for our customers? We are one of the most connected places in Europe. We were WiredScore Platinum before they introduced the WiredScore Neighborhood Certification. We were the first place in the U.K. to have that certification. We're also Vodafone's 5G hub. What does this mean for
The speed of data transfer and the digital environment we're seeing now, this is the easiest place to do business in the country, to our mind. I am obviously slightly northern focused rather than London, so you would expect me to be there. That's really important to us. We've got the number of employees of 4,000 at the BBC, but there's 50,000 hours of content come out of here. Some of the biggest, most iconic content that there is. All that goes on a massive reach, which that connectivity allows us to do. It's not just about offices and nothing like that. There's live music, the restaurants, the bars, the whole place. There is an orchestra, obviously. The tours, the cinema, the theater, the culture, depending on your leaning.
Old Trafford is just behind there, in there. You know, we're in this wider environment as well of place, there. Place is phenomenally important to us. We've got a dedicated place team, and you will be talking to them later on the tours. Some of the things we've done, Box on the Docks, this is our response to the pandemic, in that award-winning how do we support local cultural industries, how do we support our tenants to ensure that they can be used in there and really actively work with them. We're currently reimagining it at the moment, and Josie will no doubt touch on that later. Van Gogh Alive, leading immersive entertainment venue on the piazza. Over 130,000 people have come to visit that since November. They will be back next year.
Can't tell you what with yet, but we'll let you know going forward. Really, place-making is phenomenally important to us. The industries and the businesses that are here are also massively important. We've got a range of people who've started with us as one person and then now grown to many more. We've got loads of stories of this, and they call MediaCityUK home. They grew up MediaCityUK. They remain at MediaCityUK, and we will hopefully see the next great invention happen here as well. The sustainable business is massively important to us and our flexible workspace in there as well. However, no business can survive without talent, and we work beyond building property and such like with a lot of our partners here, the University of Salford we've touched on.
There's also UTC@MediaCityUK, the Salford City College. There's 10,000 students studying here at MediaCityUK, working with the businesses and industry here who will become the talent for them for the next generation. Makes it a very sustainable place in which your business to come and grow. Sustainability has been touched on a number of times. It is absolutely embedded in everything we do. I know your comments, Mark, about BREEAM, but we were the first BREEAM sustainable community 12 years ago. Things have moved on massively, and so have we. You know, we have an ESG strategy. We are signed up to GRESB, Green Flag Awards, everything that you want, massive focus on energy reduction, and you will be talking in one of the tours around to our sustainability team, who'll let you know what we've got there.
Our environmental and social targets listed obviously in the presentation are very clear, in what we're trying to do, and are very demonstrable. I think that's probably me. Phil, I think you're going to tell everybody about the exciting future for us.
Thanks, Stephen. If you heard from Stephen, MediaCityUK is an established mixed-use urban neighborhood. Now phase one was delivered just over 10 years ago and has maintained high occupancy, which is great from a cash flow perspective, but hasn't allowed the estate to attract new customers and grow. This is how phase two comes into play. Now we're not starting from scratch here. We're going to benefit and augment the already established phase one with a phased delivery of new residential space, allowing MediaCityUK to grow and thrive. What is phase two? Outline consent was secured in 2016 for 2.3 million sq ft. Since then, Peel have delivered two 19-story residential buildings, highlighted in blue on the left of the plan, both of which have been sold.
More recently, plot D3 to the north of the plan in blue was sold to Glenbrook, and you can see them on site at the moment. They'll deliver a further 280 residential units, which we'll understand to be a mix of BTR and shared ownership. This leaves us with 15 acres, currently divided into 8 plots covering 1.7 million sq ft, and this is in pink on the plan. Just to clarify, we're talking about gross sq ft here, so to get to a net lettable floor space, you need to take 75% of this, unfortunately. The mix of uses is broadly 40-60 residential and commercial, but we retain full flexibility to respond to the market.
We plan an eight-year phased delivery, investing between GBP 500 million and GBP 600 million of total development cost, including the land. To give you an idea of the scale of the opportunity, I'll just talk through the master plan. The 1.7 million sq ft broadly breaks down into just over 1 million sq ft of residential, 600,000 sq ft of offices, and 50,000 sq ft of retail and leisure uses. Now we're currently revisiting the master plan to ensure it's fit for purpose and satisfies the evolving requirements of our customers, and I'll touch on more on this shortly. Let's start from east to west, we have plot C3. This has outline consent for 117,000 sq ft office building, and this will be the first phase of the development plots we bring forward.
We are already underway with stage two design, aiming to submit a detailed planning application in April this year to have the option to start on site in Q1 next year. You can see from this page that our aspirations for C3 are much grander than the outlined consent in terms of density and massing. We're targeting 270,000 sq ft net office building, and we see the delivery of C3 as our statement of intent for the next phase of Media City in terms of specification, amenity, and ESG. We'll be designing it to be net zero, both in construction and operation. It'll have an EPC of A. It'll be BREEAM Excellent with aspirations to be Outstanding. It'll be WELL Gold with aspirations to achieve Platinum, and it'll have a NABERS rating five stars plus.
C3 sits at the heart of the neighborhood and will be contemporary, striking, and unique in design. It will show progression in technology, creativity, and innovation, allowing our existing and future customers to thrive. We're targeting rental values of GBP 31.50/sq ft, which still reflects a healthy discount to the core. If we achieve this, we'll see a healthy wash through back to the rest of the built estate in terms of the ERV, which will help rent reviews and, of course, values. We'll be targeting IRRs in excess of 11% with gross yield on costs in the high 7s. If I just dip back to the master plan now. Future commercial buildings are envisaged on plots B5, D4, and C5.
B5 will be a best-in-class 400,000 sq ft office building overlooking the shipping canal, and we may look to split this into two to give us more flexibility over delivery. D4 is a mixed use office and multistory car park, providing 44,000 sq ft of offices and just over 1,000 car parking spaces. What we're looking to do is reallocating some of those car parking spaces to plot E1 on the bottom right, which is currently a surface level car park, and this will allow us to develop more space, more commercial space on D4. Finally, in the commercial world, C5 is an 11,000 sq ft retail and market hall, and this will evolve the retail and leisure amenity of this estate, catering for the existing and new population of workers and residents.
If we move on to the residential at the bottom row. The outline consent provides for just over 1 million sq ft across three buildings, C4, C6, and C5. Our immediate focus is to bring forward a planning application for the first phase of residential to be on site in H1 2024, with completion in H1 2027. While we have consent for 1.7 million sq ft, it's worth emphasizing that we retain full flexibility over phase two. When I talk about flexibility, I mean flexibility over use to satisfy market demand, accelerate delivery, and create a diversified income stream. Flexibility over density and massing. As Colette explained, the planning outlook in Salford has changed since 2016, and we believe we can get 10%-40% more floor space by increasing density and massing without sacrificing the public realm.
This will allow us to free up more space to create a sense of place, building on the success of phase I. More isn't always better, but when it comes down to land values, it generally is. We paid GBP 35.5 million for the land at 100% levels, which works out at roughly about GBP 20 per sq ft. The more square foot we can build, the lower the land value per square foot, which generally improves profitability. We have flexibility over phase-in. We plan to build out over eight years, but we can accelerate or decelerate to respond to market demand. Finally, flexibility over the business plan. What I mean by this is we can choose to develop the land ourselves or sell off plots.
To give you an idea, the last plot sale achieved GBP 27 per sq ft, which is well above what we paid. There you have phase I and phase II in a nutshell. Once complete, MediaCityUK will cover 37 acres with 3.5 million sq ft of workspace, residential, hotel, retail, and leisure uses. The rent roll will be in the high 80 millions, and it'll have a value close to GBP 1.5 billion. Thank you for your time. We'll be happy to take questions on the tour.
Good afternoon, everyone. Welcome to part two of our Capital Markets Day, now back in the center of Manchester. We probably should have done a diligent count of heads earlier to make sure that we haven't lost anyone. If there is someone you were expecting to see that you can no longer see, please do let one of us know, and we'll do our best to track them down somewhere between Media City and here at Mayfield. To give you just a little bit of a sense of the plan of action for the next couple of hours, relatively short period of time here, with a couple of presentations.
I'm delighted to say that we're joined by Councillor Bev Craig, who is the Leader of Manchester City Council, who'll talk a bit about what's going on in Manchester, and also importantly, as a partner of ours in Mayfield. We'll talk about Mayfield in that context as well. We're then gonna hear from Mike and Martin at U+I about Mayfield and everything that's going on here. We'll have a little bit of opportunity for Q&A, but we are keen to make sure we get you out and we have plenty of time for the tours and of course, light will be fading, so our objective is to make sure we're out of here before four so that you get a good opportunity to see the site whilst daylight is on our side.
I'm gonna quickly check with Ed, who I've temporarily lost, there he is, whether I've missed anything or you want me to be covering anything else at this point. Fantastic. Well, let me introduce you to Bev Craig, who as I say, Leader of Manchester City Council, was elected to that position, last year, taking over from Sir Richard Leese, who'd been in post I think for something approaching 25 years, probably prior to that. Took up the post formally, in December, so we're delighted she's able to join us. As I think you'll hopefully have got a bit of a sense, there's a lot going on in Manchester, a really exciting place to be. We're delighted to be becoming part of that through our involvement here at Mayfield .
Bev, I ask you to join us. Thank you very much.
Thanks, it's good to be here, although a little bit different probably to be here in the day. I'm accustomed to generally being here at night, probably with a drink in my hand. It's great to be able to see the facility today. As was said, I'm the leader of Manchester City Council. I took up the post on the first of December. I think when I come to events like this, and it's great to see you all here, often it feels, when you go and you talk to people, the question always on people's tongues is why Manchester? What I would say is, why not Manchester?
I think what you will have seen when you've come up today and traveled around, but what you'll see, I think, was the scale of what we're trying to achieve here in Mayfield. It's hopefully something that's really exciting, something that has been a long time coming, and something that's been carefully crafted in terms of the vision and the partnerships that we seek to create. I'm excited about what we can do in Mayfield, and I hope that you'll be excited too.
If I think about Manchester, and I think about, you know, the history that is rooted in our city, a city of firsts all the way back to the first industrial revolution, the home of the Suffragette movement, splitting the atom, the first computer. One of the things that really, I think, differentiates what we have in this city is the spirit of the future and to not stand still. We see that in the city center when we walk around. If I think back, 1990, we had 500 people lived in Manchester City Centre area. You look around now, and we're approaching well over 60,000 people. We've got a thriving and growing population that sees our population numbers move up to 600,000 by next year and an extra 30,000 projected by 2026 alone.
Manchester has already been named in the UK the most livable city, but also by Time Out, the third coolest city in the world to live in. That's something that we don't want to rest on our laurels, something that we will continue to strive how we can create, I think, neighborhoods in our city that are different, that offer different opportunities to people, and to create thriving economies of the specialisms that we've already created. We're Europe's fastest growing tech city, but we're also looking at what more we can do to diversify our economy, to bring in new businesses and new industries into what's already, I think, a thriving eco space. I would say from my perspective, I mean, I've been a councillor in the city for 10 years. I oversaw the city's health and care response to the pandemic.
I think even we've been surprised in Manchester, the pace and the speed that we've bounced back post-pandemic. At a time when people were telling us the days of the office is over as we know it, Manchester over the last 12 months has seen a really accelerated rise in the number of companies choosing our city as a home either to have their base or to have European hubs. That's something I think that really excites me. In the city, we're also known for our partnerships, and I think we're really looking forward to the coming years working with U +I, Landsec, to make sure we build on the partnerships we already have, because that really is our strength. I think when you walk around the city, you see differentiated neighborhoods, many of which weren't there 20 years ago.
There's something really important to me around having a clear narrative and vision for a new neighborhood that means it'll stand the test of time, that will benefit and deliver for the people of Manchester, but will also drive Manchester forward in a globally competitive world. We're an ambitious city, we're a confident city, and you've obviously been out today and you've seen MediaCityUK. We in Greater Manchester work together really closely to make sure we're maximizing all of our opportunities. Because I think the opportunity comes for Greater Manchester when we play to all of our strengths, and I think that's hopefully something that you will get to experience and you'll see more of.
I suppose the bit that I would also say, and I think one of the exciting things about the city, is that when we look forward, we don't just want to see more of the same. We want to see exciting new ideas that play into our ambitions around zero carbon, but also speak to what residents tell us they want to see. That's around what you get out of neighborhoods, livable neighborhoods with lots of exciting and fun stuff to do. Hopefully, that's the message you'll get from Manchester as well. We're quite big on our fun. From creative industries to our nightlife, to the music and sports scene, it's something that runs through our DNA.
It's also a real strength because when I go out and speak to businesses that are choosing Manchester as a place that they'll relocate to, they talk about the lifestyle that the people who work for them get to have. They talk about the experiences that you get when you clock off and when you get to do in your weekends. Great to see you all here. I'm excited about the future of Mayfield. I think we've got something really exciting and a very rare opportunity actually to build a neighborhood from scratch.
To start with a vision where the first thing you build is a public park, and that's Manchester's first public park in over a hundred years, has really excited, I think, our people locally in saying, "Actually, when we look at a neighborhood, when we look at the future of the city center, we're starting with the building blocks. We're starting with the bits that you'll experience first, that will excite you, that will draw you into the area, and we're building around it." I'm just really pleased to be here, pleased to welcome you here. I think, you know, you're gonna do an incredible job with delivering on our vision going forward. I'm excited to see what we can do. Thank you.
Bev, thank you very much, and really appreciate you taking the time to join us today. I meant to say earlier as well, of course, that you're also the perfect poster child for graduate retention in Manchester, which is one of the big things that drives the economy here. 60% or so graduates stay after graduating. Bev arrived from Belfast in 2003, 19 years later now leading the council. Thank you for joining us. I'm now gonna pass over to Martyn and Mike, who are gonna talk through Mayfield.
Thank you. Hello, everybody. I'm Martyn Evans. I'm U+I's creative director. We are so happy that you are here today with us at Mayfield, and we're really happy that you've been able to share some food before you sat down and listened to us talk. Because we're extraordinarily proud of this project. It's been a quite long time getting to today. So I'm just gonna do a quick whip through where this project started, why it's important to us, why it's now important part of Landsec's wider portfolio, and then Mike's gonna talk about the business of Mayfield.
This place is about this, really. It's about an illustrious future built on an industrious past. As Councillor Bev Craig said, Manchester has a place in the world as the beginning of the Industrial Revolution. This is a place where industry was born. We're in a building that was a product, much later than the Industrial Revolution, of that industry. This building was built in 1910. It was built as an extension to Piccadilly Railway Station, to cope with the increasing suburbs in southern Manchester, the passenger load coming from the south of the city. It's a hugely important and quite beautiful part of this city's history. Our job is to take that industrious past and create a new industrious, illustrious future. This is it. This picture was taken in about 1905.
You can see the depot where we are. We are in here. You can see the railway infrastructure. You can see Piccadilly Station above. You can see just the little square box is our office now, which is just here, and Mayfield Baths. This place was a place of great transport infrastructure. It was a place of great industry in the eighteenth century, and it was a place in the Victorian era of great public amenity. Those baths were baths where people came to wash their clothes and wash themselves.
The Poulton, one of the buildings that we're gonna tell you about in a little while, which is our first building that's gonna be on-site, is named after George Poulton, who was an entertainer who worked at the baths. It was his job to encourage people to think that it was okay to get wet. He would perform in the swimming baths, and he used to smoke a pipe underwater and drink a pint of milk underwater and swim and do flips and dive and all those things to make people feel that they were happy to get wet and get clean. Mayfield has been also a place of great public education and a place where people came to form a sense of community. In 1782 came to this great place, Thomas Hoyle. Thomas was a textile printer.
It's very easy just to imagine that that's much like many other places in Greater Manchester and Lancashire and the North West. Thomas came to do a very particular thing, which was to make very cheap cotton, calico, that had never been able to be, before he started working with it, white. You need white cotton in order to be able to print bright colors on it. He created a way that was, in 1782, probably not the most environmentally friendly way of bleaching cotton to make it white, so that it could be printed in bright colors. That created a social revolution because it meant that people who were of low income, who bought very cheap clothing and very cheap cloth, could have very bright, colorful clothing, which previously had been muddy and grim.
This mill that was on-site, and we have just, not that long ago, finished excavations with our archaeology team to uncover all of the basis of his factory, which is quite beautiful infrastructure, created a revolution, a social revolution here at Mayfield. Fast-forward to 2015. This site, since it had closed in 1986 as a useful place, had lain derelict. I think a product of often public sector land in multiple ownership and not developed. In 2015, the three parties who owned the land here, so Manchester City Council, Transport for Greater Manchester and LCR, came together to form a concerted vision for what this place wanted to be and went out and sought a development partner.
Our company was very lucky enough to be selected by Sir Howard and his colleagues at Manchester City Council with the partners to be the development partner to the public sector consortium of the scheme. We wanted this scheme very badly. This is a wonderful city where we were not working to any great degree before, but we saw enormous opportunity here, and we were very excited to be able to sign a development agreement at the end of 2016. This is the shape of our partnership. The Transport for Greater Manchester, LCR and the City Council have a consortium that own 50% of this development, and U+I now, as part of Landsec, have the other 50%. We have a board for the development.
The public sector partners have their own board, and together we come to make this place happen. Towards the end of 2018, we negotiated an SRF, Strategic Regeneration Framework, with the City Council's planning team, which is effectively an outline consent. This is basically what we negotiated. You can see it's very large. It's 24 acres of central Manchester, right in the heart of the city, with, as Councillor Bev Craig said, a park in the middle and then buildings all around the outside in a kind of ellipse. That's what it looks like as we start to develop more detail in the design. We are currently in here. It's going to begin to look something like this as we start to move into delivery.
As we walk around in a short while, you're gonna get to see the park. I'm told that they are laying turf today for the first time. Everybody that's come and visited to date has seen a brown, muddy field. You're gonna actually get to see some green today, which is pretty good. You can see the kind of place that we're going to build. What's really important in regeneration development to de-risk planning, to create a sense of momentum that everybody involved in delivering it can gather around. To create proper value in places like this is to create a sense of place and connection. We wanna be about as far away as possible from this being a property development. We're building a place. You know, we've got an enormous privilege here in Manchester.
We're being given for the tiny little period that we're all alive, custody of 24 acres of the center of this great city, and so we have a duty to do right by it. Creating a sense of place and connection is right at the heart of what we do here, in Mayfield. As soon as we arrived, we hunted for a place on site where we could bring people in immediately because, of course, what would be the cheapest and easiest thing to do is erect a great big fence all the way around the site and hire a security guard with a dog and keep people out. Of course, that does nothing to achieve that, so we are keen always to open our doors and invite people in.
No better place to invite people in than over some food, as I hope you've experienced just now. In one of the arches which we'll look at as we go on our tour, down at the east end of the site, we created GRUB, an immediate food and drink venue where people could come and eat and share and meet. You could get married here, in fact, at one point before it closed. Manchester International Festival is an enormously important cultural event in this city. It's one of the most important cultural festivals in the world, and they have been here three times in the last six years doing really large and important events. This is a place called Invisible Cities and happened in the Depot, and you will see it as we go on our tour.
We started to put some enterprise on site. This is all about us creating little glimpses with the tools that we have of how this place is going to be in the long- term. When we finish building Mayfield, 16,000 people will work here, some of the most innovative companies in the world, as Councillor Craig has said. We started with six small businesses in a little stack of shipping containers up on the top. You might think that was insignificant, but it isn't. It's about creating a sense of place and building a jigsaw of people here to imagine a glimpse of how it's gonna be in the future.
Tens of thousands of children came here and rode BMX bikes through a BMX track that we put in one of the single-story sheds out in the middle of the site. They were operating for two and a half years and were enormously successful. Then came the real fun. What we knew we needed to do here was to create a sense of place in a big way, and where you're sitting now was part of that response. We went and found the experts, and that's a consortium of these three organizations who we just gave them a simple brief. How do we open the doors to this place and invite people in to have fun? Their response was to propose that we build a 10,000-capacity nightclub.
We didn't know how to do that, never done that before, but of course, we relied on them and their expertise. In 16 weeks, they built a nightclub, and you're gonna get to see it as we go on our tour. It opened in August 2019, and 350,000 people came and danced the night away in the five months that it was open before it had to close before March in the pandemic. There it is. It's a business partnership between U+I, now Landsec, and the Broadwick Group, so we are in business with them, so it's a money-making venture. It's most importantly a venture that draws people here. We cleared the site, and 15,000 people came in the summer of 2019 to Pride in Manchester.
You know, Pride is one of the most important events in the cultural calendar in this city. Manchester is a particularly important city in the Pride movement, and so, Ariana Grande was here. I don't think that's her, but she was here on stage entertaining 15,000 people in the park. When COVID hit, it was important that we had a response to that. The large team that had been assembled to create the Depot pivoted, and very, very quickly as we came out of the first lockdown, they were able to open a response to COVID. Outside where, just where you came in, the seats and tables outside were where we began this project with an outdoor, COVID-secure food and drink operation. That ran very successfully during the various lockdowns and the iterations.
When we came out of lockdown last summer properly, this place had been created, and now 6,000 people a night are entertained here. By the end of this month, we will have entertained over two seasons at The Warehouse Project in the Depot, and it's great, we will have entertained 1 million paying customers on site here at Mayfield. That's the alternative to putting a fence up and hiring a security guard and a dog, investing, making some money, opening the doors, and entertaining 1 million people. I think that if you'd asked 100 people in Manchester what Mayfield was three years ago, most of them would have shrugged and said they weren't entirely sure. The small amount who knew where it was probably came here for slightly nefarious purposes.
Now you ask 100 people in Manchester what Mayfield is, they say it's one of the most jumping, exciting, amazing places in the city, and we haven't built a single brick of a building yet, so very successful exercise. Of course, as Councillor Craig said, at the heart of our scheme, and the first thing that we're delivering, is Manchester's first new public park for over 100 years. It's not just a nice thing to do for the city, it's also a sensible thing to do for this project. We know that in order to make this project as competitive as possible as a commercial opportunity, we need to create a sense of difference and a sense of place here.
Post-COVID particularly, it's no good asking large companies to come and imagine putting 5,000 of their employees in this location if you don't tell them why they need to come and put 5,000 of their employees here, because this is a fantastically amazing place where their employees can not only have a successful working life, but have a successful lunch hour, evening time, and bring their families at the weekends. Not to mention the people who will live here. Very, very important that we put the park first in our development plan 'cause it sets a stake in the ground and sets a tone for the place. We had a plan to pay for the park and build it and then pay that money back from the development process.
Of course, COVID got a little in the way, and so the confidence with which we wanted to do that was a little knocked. The government stepped in, and from its COVID Getting Building Fund, we were awarded GBP 23 million through the combined authority of the city council down to the park, and we began to build almost immediately. In the autumn of 2020, we began building the park, and you will see it's almost complete when we go on our tour, and by the end of March, the construction will be finished, and then over the summer, the horticulturalists move in, and it will open to the public in September. It will look something like this. It has a lawn where we have capacity to entertain 3,000 people to events.
It has an amazing children's play area that is just finished being installed, and you'll be able to see it, with a slide that goes over the river. This is what this place that was industrial dereliction not that long ago will look like by September this year. The entire site has 13 acres of public realm. In the middle of it, a 6.5-acre park with the River Medlock through its heart, and construction will be complete in the next six weeks. That's a quick whip through why this scheme is what it is. Mike will tell you what our plans are for it going forward.
Thank you, Martyn. Good afternoon, everybody. It's very nice to see some familiar faces. I'm gonna talk to you a bit about the future of Mayfield. What you've heard from Martyn is our journey to date, is how we set the vision together with our partners. Now we're very much focused on how we realize that vision together. Working with our partners at Mayfield, we've created this wonderful 24-acre mixed-use opportunity at the heart of this great city. Over time, what we expect is that Mayfield will deliver over 1.5 million sq ft of new office space, 1,500 new homes, and in total, a development that has a value of, we hope, north of GBP 1.5 billion in GDV. We hope that it has a broader value as well for Manchester.
We believe this development will deliver over GBP 7.4 billion of social and economic value to the city of Manchester over the next 10 years, and that includes 16,000 new jobs. We wanna help Manchester in reaching its target to become net zero carbon by 2030 by doing that here at Mayfield by 2028. We're gonna show you around in a minute, and that's something we're really keen to do. We're really excited. This is one of the best projects in the U.K. for regeneration. This is to help orient you. As Martyn indicated, we're broadly sat under number eight at the moment in the depot, which remains as a core part of this project. The whole scheme has effectively an outline planning consent and SRF, which sets the massing, the mixture of uses and such like for the scheme.
We're now starting to think about how we realize it. two, three, and four are our first of 16 development plots. two, three, and four have detailed planning permission, and as you'll see in a minute, include the Poulton and the Republic, which are our first two office offerings. Over time, we expect to work along the Mancunian Way, which you see at the bottom of this diagram. We expect to flip over into the depot, transforming what are temporary uses in this space to permanent uses as part of a program of exciting leisure, food, beverage, and other uses across the site. Building on top of this great depot with some fantastic new office spaces.
As we move through the site, as you see the teal-colored dots, and in particular 13-16 at the end, you see more residential coming through with about 1,200 residential units at that end of the site. We see this coming forward in phases, and we're working with our partners at the moment to consider how we might do that. What I'm sure you'll be interested in is what the opportunity here is at Mayfield. While that's still being developed, we think the opportunity in phase one is in the order of 1 million sq ft of development, 400,000 sq ft of new offices in two buildings, over 400 new homes, and we think that has a value of over GBP 300 million and an opportunity to invest over GBP 200 million of capital.
As you heard from Colette earlier on today, we think these types of projects should be delivering a return which is low to mid double digits. Just to give you a little bit of a flavor, this is the Poulton. This is our first building on site. It looks directly onto the park that Martyn just talked about. It's a smaller office building. It's just over 70,000 sq ft. What it provides is an opportunity for us to start to set the tone here at Mayfield. Potentially, it's a mixture of different tenancies. It's potentially including some flexible working.
What it does, as all of the buildings do at Mayfield, is includes fantastic ground floor spaces for restaurants and other mixed uses, which will become part of a programmed series of spaces across the whole estate. It's very important for all of our partners that this scheme gets going as soon as we finish the park, and we're working together to try and get this building on site this year. This is a sense of the lobby space. Then we move on to the second building, The Republic. This sits next to the Poul ton as we work our way along Mancunian Way. It's a larger building of 244,000 sq ft. Again, it has larger footprints. Has the opportunity if people want to, and we hope they will, to pre-let and to bring bigger companies and organizations to Mayfield.
It also has the opportunity to create larger public and amenity spaces at the ground floor. What you see here is the auditorium, which would be available not just for companies that are based within The Republic, but also for the general public who wanna come to Mayfield and enjoy Mayfield. All of our buildings are highly sustainable. We talked earlier about some of the targets. Mayfield would also be progressive and best in class as far as the quality of the buildings that we create here. Going back to what Martyn was saying, when we started this project, it was really important that we set out a vision for Mayfield and with our partners, we wrote this, and I'll show you in a film in a minute, which was what we also did.
What we said is that Mayfield will deliver exemplary regeneration in an inclusive and authentic way from immediate worthwhile uses that you see here today to long-lasting socio and economic growth and societal wellbeing. Mayfield will create a brand new part of Manchester City Center through intelligent urban development that retains much of the beautiful historic industrial infrastructure that you see today alongside new sustainably designed market-leading buildings in 11 acres of new green public space, including the park that you will see today. 16,000 new jobs across tech, professional services, and creative industries will find a home here. First-time buyers, professionals, families will find homes in 1,500 new houses and apartments surrounded by cafes, bars, shops, and leisure spaces.
When we do this well together, we'll benefit from land enablement gains, recurring development management fees, develop out profits, and recurring income where we retain assets to capture their long-term value. These returns are attractive, they're long-term, and they're risk balanced, and importantly, they're shared with our partners and with the community within which we're working. What I'm gonna show you next is the other thing we did at the very start of the project, and as Martyn said, it would be too easy to put a hoarding up or do a flashy brochure. We worked with a poet and artist called ARGH KiD who is a well-known Manchester man, and what he helped us do is to capture within a short film and a poem our vision for Manchester, the essence of what we wanna create here.
What we hope is it gets your blood boiling and excites you as you start the tour of this site.
Clouds burst in the gray slate skies. Creativity reigns. Possibilities pour over the population of this united city that has so much to answer for. Manchester's sprawling, a haven for heathens, hoodies and hipsters, hijabis and Hebrews, highbrow intellectuals and however you sexuals, it's home for all. All's welcome in this migrant's melting pot where every smell, sound, and taste is on tap. From Jamaican jerk to gourmet chip bars. We do things differently. We do it with rebellious charm, radical courage, riotous class, an illustrious future built on an industrious past. Welcome to Manchester, catalyst capital of earth, where brains meet balls to birth world firsts. Cotton mills, canal boats, Peterloo, Ancoats, L.S. Lowry and steam trains, bouncing bombs, burning bras, Henry Royce, Pankhurst and Marx paved the Mancunian way. Now, miraculous medicinal machines, music, art, and graphene break new ground today.
For innovation, audacity, and imagination is the makeup of our DNA. Tomorrow, who knows? As the saying goes, history likes to repeat herself. In the future, who'd be anywhere else than here? Where everyone has the power of possibility, where ideas and ambitions are probability, where things get done for others to follow. Where opportunities flow and communities grow. Defiantly Mancunian, globe defining, definitely Mayfield.