Market snapshot

Office Market Pulse Manchester Q3 2014

City centre take up at the end of Q3 amounted to 968,338 sq ft and exceeded the annual take up for 2013 by 11%.

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In this issue:

Take up at end of Q3 already exceeds 2013 total for year

Aggregate city centre take up at the end of Q3 amounted to 968,338 sq ft and exceeded the annual take up for 2013 by 11%.

However, the actual volume of city centre office space transacted in Q3 was less than the same period in 2013. Total quarterly take up was 31,514 sq ft down in comparison with Q2 2013.

Grade A take up within Q3 was significantly lower compared to Q2 with only 7,376 sq ft transacted.    Leasing activity in this sector is predated to raise in response to increased supply, principally One St Peters Square.

The out of town markets were dominated by occupiers acquiring refurbished (C) and substantially refurbished (B) workspace reflecting the limited supply of legacy grade A accommodation within the most active sub markets of Wilmslow, Altrincham and Cheadle.

One St Peters Square completion adds to grade A city centre office space

Grade A availability reached a recent low of 255,884 sq ft has since increased by 74% following the practical completion of One St Peters Square. It now stands at 446,000 sq ft.

The supply of substantially refurbished stock across the city centre continues to fall and now stands at 878,699 sq ft. 

The supply of large grade B floor plates has diminished significantly and occupiers looking to operate within such space will be forced to consider new Grade A supply or take space over multiple floors.

With no speculative development in the South Manchester market, the supply of both grade B and A stock is set to diminish further.  

Key Manchester office transactions Q3 2014

Property  Size Landlord(s)  Tenant / Purchaser 
Lancaster Buildings (city centre) 13,000 sq ft Maple Grove Developments BCL Legal
Renaissance Court (S. Manc) 23,582 sq ft Private Investor Contour Housing
 Manchester Green (Airport) 18,643 sq ft  Barwood  Chiesi
1 Cheadle Point (Cheadle) 12,785 sq ft Chester Haylow National Tyres
The White Building (Salford Quays) 17,778 sq ft  Peel Media  Bright Futures

Source: Lambert Smith Hampton

Reducing quality supply reduces incentives

The headline rent for newly developed grade A accommodation stands at £32.00 psf within the prime core, Spinningfields and St Peters Square.

Headline rents for substantially refurbished grade B stock range from £17.50 psf to £27.50 psf.

For both grades, incentives are starting to reduce as choice becomes more limited for occupiers.

Office investment activity in the region remains strong

Investment activity in the Manchester office market remained strong this quarter, with investment volumes totalling £215m, significantly higher than the £46m recorded in the same quarter the previous year.

Significant deals included:
• Legal and General’s acquisition of 1 Piccadilly Gardens for £75m, reflecting a yield of 5.64%.
• NFU Mutual’s purchase of Chancery Place for £57m, reflecting a yield of 5.05%.
• Moor Park Capital Partner’s acquisition of Fujitsu’s building at Central Park for £40m, reflecting a yield of 7.25%.

Investor confidence and occupier sentiment will continue to improve and with the value of London assets rising, we expect investment activity in the region to remain high into Q4 2014.  


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