Manchester office take-up at seven year high

Manchester leads growth

Real estate advisors Colliers International said take-up of prime office space in Manchester reached its highest level for seven years in the final quarter of 2016, according to its latest research.

Law firms and media and technology firms led demand with 17% and 16% of the take up.

About 621,016 sq ft of office space was let to occupiers in 83 deals from October to December 2016 – the largest amount of space taken since 2010.

More than half of all office space let in Manchester in 2016 was suites of more than 10,000 sq ft with the average deal size being 5,045 sq ft, about 18% higher than 2015.

However, Colliers director Peter Gallagher repeated the firm’s concern that the “acute shortage” of immediately available Grade A office space in central Manchester would result in an “unprecedented complete absence” of ready-to-occupy space by mid 2017, lasting until the end of 2017.

Colliers said that in the absence of new available office space, rents across the city continued to rise in 2016 with headline rents for Grade A suites increasing by 3% to £35 per sq ft.

The shortage of supply combined with ongoing occupier demand would place further upward pressure on office rents with the best quality accommodation expected to hit £40 per sq ft by 2020, according to Colliers’ report.

Gallagher said the Manchester investment market remained strong in 2016 with £565 million of transactions compared to £611 million in 2015 and would continue to be driven by overseas investors seeking value provided by the weak pound.

“Overall, the city centre office market has shown a remarkable resilience following the EU referendum, with 2016 take up exceeding that of other regional UK cities,” said Gallagher.

“With Virgin Media and Vodafone in the market with ‘live’ office requirements, Manchester’s media and tech sector is set to dominate the wider Manchester market over the coming year, helping to create a diverse and vibrant economy and cementing Manchester’s claim to be one of the leading regional tech hubs.”

Total take-up for 2016 was 1,306,599 sq ft, roughly the same as 2014 and 2015, Colliers said.

Major Manchester office deals secured during 2016 included:

  • Covea/Swinton Insurance agreeing to take the entirety of 101 Embankment, the 165,000 sq ft Grade A office scheme in Salford being delivered by Ask Real Estate in a joint venture with Carillion and Tristan Capital Partners
  • Co-op Digital completing its occupation of Federation House NOMA by taking a further 45,446 sq ft
  • Manchester Metropolitan University (MMU) acquiring 63,661 sq ft at 6 Marlborough Street
  • Deals for more than 50,000 sq ft of Grade A office space at No 1 Spinningfields and XYZ Building
  • Law firm Freshfields Bruckhaus Deringer agreeing with English Cities Fund to move its global centre into 80,848 sq ft of One New Bailey, Salford