How a rag-trade city saved its Cinderella

Manchester's industrial quarter, with its neglected listed buildings, is next for regeneration. But North West Development Agency has had to intervene to make sure everyone benefits.

An old Manchester hand about to return to the city after a number of years realised it had changed beyond recognition when she saw that a Conran restaurant had opened there. As barometers of stylishness, smart eateries speak volumes, linked as they are in people's minds with the dramatic transformation of London's Docklands. An equally successful redevelopment of old warehouses into canal-side homes with bars, shops and studio offices has established Castlefield, in south Manchester, as a popular residential area where prices are high and the turnover low. But now eyes are turning to the north of the city, where large swathes of old industrial land ripe for development are about to become subject to a compulsory purchase order (CPO).

An old Manchester hand about to return to the city after a number of years realised it had changed beyond recognition when she saw that a Conran restaurant had opened there. As barometers of stylishness, smart eateries speak volumes, linked as they are in people's minds with the dramatic transformation of London's Docklands. An equally successful redevelopment of old warehouses into canal-side homes with bars, shops and studio offices has established Castlefield, in south Manchester, as a popular residential area where prices are high and the turnover low. But now eyes are turning to the north of the city, where large swathes of old industrial land ripe for development are about to become subject to a compulsory purchase order (CPO).

Last week, the North West Development Agency made the unprecedented announcement that it will be issuing an order on 20 acres of land in Ancoats, a run-down area on the outskirts of the city centre, once the heart of the rag trade. It is the first time a development agency has ever used these powers for a regeneration scheme. The potential of the area, about 50 acres, is enormous. Once the centre of the rag trade, it was the world's first industrial suburb laid out in a unique, New-York style grid-iron pattern. Its rich heritage includes 14 listed buildings, and developers have been keen to convert the mills into trendy homes. But, ironically, it is those expectations that are holding back regeneration.

Lyn Fenton of the Ancoats Urban Village Company says the CPO should be regarded as a wake-up call for owners of property and land there, many of whom bought speculatively during the city's two Olympic Games bids.

"We don't need to interfere if someone can come up with an acceptable proposal, but there are those with derelict buildings or key parcels of land who believe the longer they hold on to them the more valuable they will become. It is a very complex site where it is sometimes impossible to even find the owners.

"Its location to the north of Manchester puts it within a 10-minute walk of Piccadilly Station and with developments springing up in the bordering and newly fashionable Northern Quarter, owners are adding noughts to values. The decline in Ancoats was hastened when owners assumed that vacant possession would be handy, but the buildings just became even more run down," adds Fenton. "We are not looking for control but want to make things happen."

However, this "urban village" philosophy of putting the variety and interest of a city into the scale of a village implies control and is a driving force of the Prince's Foundation, which is involved in plans for Ancoats. Jason Syers, the development and regeneration manager for the north of England, wants to see more input into building design and a clearly defined strategy. "If it were to be purely market-led we would not get a broad mix of tenures. There has to be a vision of how it will work in the years to come . Without that framework you may end up with a superstore but no corner shop, or one multi-screen cinema but nothing local. It needs to be compact with its own character, otherwise it will look like any residential development in any city."

There are already signs of change in Ancoats. The first new development in more than 20 years is underway in the old Express printworks. The first phase of 22 apartments has been sold to one investor, while the second phase of 46 is being launched at the beginning of next month. Three floors of the building, known as Connect House, are being turned by developers Artisan H into a media centre with units for small businesses that can be rented for as little as three months. Residents can also use the facilities such as video conference rooms. Prices for two-bedroom flats range between £100,000-£200,000.

Julie Twist, whose estate agency is selling at Connect House with Knight Frank, says that at least four other developments are about to come on-stream. In the adjoining Northern Quarter, with its mixture of old commercial buildings and small streets, one-bedroom flats sell for £70,000-£80,000 and two bedrooms up to £140,000. The area still has a way to go, but it was chosen by Conran & Partners, the architecture and design side of the business, as the site of one of their first ventures outside London. The apartments at 25 Church Street, a former BT building, were completed six months ago by developers City Lofts and Pathfinder, the majority having been sold off-plan. One-bedroom flats that sold for £75,000 are now on the market for around £100,000. Penthouses start at £300,000.

Developments of a high quality quickly have a knock-on effect in the immediate vicinity. After the 100 units at the Tobacco Factory on Ludgate Hill, to the north of the city, were finished - a combination of new build and refurbishments - the revitalisation of the industrialised areas began. It sold out quickly a year ago at prices that began at £70,000 and would now be closer to £85,000. Richard Donnell of FPDSavills Research who is assessing Manchester's development potential, says that mixed use is crucial. "There is a huge supply in the pipeline. It will sell if it is reasonably priced. But if it makes the mistake that London's Docklands did originally of providing a lot of housing and no employment, it could be a different story," he says.

Julie M Twist estate agents: 0161-834 8486

Knight Frank: 0161-833 0023