Findings from our latest Manchester Office Market Pulse show that Manchester ended 2012 on a high with a strong performance in the final quarter ensuring that the city is once again the most active region outside of London.
Take-up for the city increases in the fourth quarter
A total of 85 deals across Manchester City Centre helped contribute to an exceptionally busy end of year, with take-up in Manchester City Centre seeing an increase on the third quarter (172,000 sq ft) to 275,000 sq ft in the final quarter. Although less than the five year average (930,00 sq ft), 2012 completed ahead of last year (701,390 sq ft) at 758,615 sq ft.
David Thwaites, Associate Director and Head of Office Agency in LSH Manchester remarks: “Manchester City Centre’s total has exceeded many people’s expectations and is particularly impressive when you consider that the largest deal was 24,000 sq ft. These results demonstrate the underlying strength of the city’s ‘churn’ market.”
Out of town market performs better than 2011
Outside of the city, the out of town occupational markets also showed strong performance and ended on a six year high at 646,780 sq ft, a significant improvement on last year’s 491,000 sq ft, with the transactions to Micromass Waters (100,000 sq ft) at Wilmslow Office park and Belmain (50,000 sq ft) at Cheadle Park being major factors in the region’s success.
In contrast Salford Quays saw a reduction from 93,809 sq ft in 2011 to just 67,830, a figure far less than the five year average (107,420 sq ft) and with the imminent departure of Barclays as a major occupier the area, according to David, needs to attract major occupiers to bring it out of its current slump
David adds: “Although old Trafford has remained active, Salford Quays as a location has continued to struggle in recent years. The deal for Vital Services who have acquired 20,000 sq ft at The Soapworks will help matters, but alone the impact will be minimal.”
Lack of Grade A supply impacts on Grade B+ accommodation
The lack of Grade A supply was noted in the report as a major feature across the region. Estimates suggest that 510,000 sq ft is available in the city centre in comparison with 597,000 sq ft for the previous quarter. This shortage in Grade A supply has also impacted on the Grade B+ accommodation with supply totalling 446,000 sq ft – a reduction of 60,000 sq ft on the previous quarter.
Headline rents in Manchester are firmly established at £20.00 per sq ft within the City Centre and £19.00 sq ft for our of town business park accommodation.
Increase in activity expected for 2013
David concludes: “The lack of Grade A supply is an issue which challenges both the City Centre and the wider Manchester market place. However it has benefitted those buildings that have undergone substantial investment, such as Grade B+ stock and headline rents to be maintained with reduced incentives.
“Although major occupational activity was limited in 2012, the recent announcement of a move by Barclays in addition to Bupa’s 140,000 sq ft requirement alongside the imminent completion of Project Tomorrow means there are positive signs for Manchester at the start of 2013.”
To view the full version of our latest Manchester Office Market Pulse, please click here.