Market snapshot

Office Market Pulse Manchester Q2 2013

Despite a fall in take-up during the second quarter of 2013, with half year figures up 49% on the same period last year, the Greater Manchester office market looks set to exceed the total space transacted in 2012.

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In this issue:

Increase in demand for smaller office requirements

Office take-up has fallen by 29% and 20% in the city centre and out of town markets respectively during the second quarter of 2013.

Despite this drop in take-up, the half yearly total has increased by 49% on the corresponding period in 2012. A strong performance in the second half of the year should see take-up exceed the 2012 total. 

Smaller transactions of below 5,000 sq ft dominated activity. As a result, we are still seeing demand from serviced operators looking for space in Greater Manchester. Orega has recently taken a 12,805 sq ft centre at 76 King Street in the city centre.

For a detailed breakdown of Q2 2013 take-up by grade, please click here or on Chart 1 to the left of this article.

Key Manchester office lettings Q2 2013

Property 

Size (sq ft)

Landlord / Vendor  Tenant / Purchaser 
Lakeside 5000

 37,456

Skandia  Balfour Beatty
29-31 Dale Street, Manchester 

 18,118

Private Investor  Iconix
76 King Street, Manchester 

 12,805

53 N Orega
Quay West, Salford Quays 

 12,666

Peel  IGT UK Gaming
Voyager, Manchester Airport 

 9,890

Manchester Airport Group SCA Hygiene

Source: Lambert Smith Hampton

Limited opportunity for larger out of town occupiers

Supply of grade A and B stock within the city centre declined slightly from the previous quarter. The majority of grade A supply continues to be dominated by buildings in Spinningfields and Piccadilly, with limited availability remaining in the traditional prime core.

Following Balfour Beatty’s sub- lease of Lakeside 5000 at Cheadle Royal, the lack of larger corporate HQ buildings in the out of town market is becoming more acute, with a number of outstanding requirements still unsatisfied.

Barwood has recently completed the purchase of Greencourts Business Park at Manchester Airport from Standard Life. The rebranding to Manchester Green and planned refurbishment will increase quality supply by circa 40,000 sq ft.

For a breakdown of Q2 2013 office supply by grade, please click here or on Chart 2 to the left of this article.

Headline rents remain unchanged for second consecutive quarter

Headline rents for grade A office space across Manchester city centre remain unchanged at £30.00 per sq ft and for wider out of town markets, £19.00 per sq ft. 

MediaCity continues to attract a premium, with headline rents of £21.50 per sq ft for grade A accommodation.

Prime incentives remain at 18 months for a five year term certain.

For a breakdown of Q2 2013 office rental values, please click here or on Chart 3 to the left of this article.

Growing appetite for investment in Manchester

Manchester’s office investment volume totalled £99.6m in Q2 2013, which is significantly higher than the £13m recorded in Q2 2012.

There continues to be healthy demand for high quality city centre stock, the most notable transactions include:

  • 100 Barbirolli Square acquired for £41m in a joint venture with Oaktree Capital Management and Moorfield Real Estate.
  • Epic UK Ltd’s purchase of 1 The Avenue for £19.7m, reflecting a net initial yield of 6.15%.
  • Orchard Street Investment Management’s purchase of Bauhaus, Quay Street for £16.25m, reflecting a net initial yield of 7.6%

To view our latest UK Investment Transactions (UKIT) report, please click here.

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