Market snapshot

Office Market Pulse Manchester Q4 2014

City centre office take-up for 2014 as a whole totalled 1,333,425 sq ft, up 53% on the 2013 total of 869,180 sq ft. Significant activity in the final quarter of the year resulted in almost double (93%) the office space acquired compared to that of the same period in 2013.

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In this issue:

Take-up at the end of 2014 is over 50% up on 2013

City centre office take-up for 2014 as a whole totalled 1,333,425 sq ft, up 53% on the 2013 total of 869,180 sq ft.

Significant activity in the final quarter of the year resulted in 383,507 sq ft of office space being acquired, almost double (93%) that of the same period in 2013 where take-up was 199,095 sq ft.

Grade A take-up within Q4 was significantly up on the previous quarter with 126,456 sq ft transacted.  The legal sector accounted for 61% of this activity as DLA, Nabarro and TLT Solicitors concluded deals in Spinningfields and St Peters Square.

In the out of town markets, significant lettings to Talk Talk, John Lewis and TT Games along with CDL’s decision to expand into an additional 30,000 sq ft of space in Stockport resulted in Q4 take-up reaching 241,588 sq ft, an increase of 22% on the previous quarter.

Introduction of substantially refurbished stock

Grade A city centre supply has substantially diminished during Q4, dropping from 446,347 sq ft to 330,431 sq ft.

Developers are now responding to this increased shortage as office schemes under construction by the end of the year amounted to 549,000 sq ft; significantly up on the 160,000 sq ft in Q3.  Much of this new space will not be delivered until 2016 or 2017.

With little new build development taking place in the south and west Manchester markets design and build opportunities are being considered by larger corporate occupiers who are carefully considering their future expansion.

Key Manchester office transactions


Property  Size Landlord(s)  Tenant / Purchaser 
One St Peter Square
44,880 sq ft
GMPVF
DLA
Kings Reach (S.Manc)
30,000 sq ft
Seddon
CDL
Towers Business Park (S.Manc)
24,630 sq ft
 Moorfield
John Lewis PLC
Sevendale House (city)
22,764 sq ft
Phillip J Davies Holdings
National Tyres
3 Hardman Square (city)
22,049 sq ft
 M&G Real Estate (formerly Credit Suisse)
 TLT Solicitors

Source: Lambert Smith Hampton

Incentives continue to reduce

Prime grade A headline rents remain unchanged at £32.00 per sq ft, achieved in Spinningfields.

Incentives continue to reduce across new build and substantially refurbished space, with a rental incentive of 12 months on a five year term becoming increasingly apparent when occupiers have limited choice.

Out of town rental growth remains unchanged with the exception of Towers Business Park where a rent of £21.00 per sq ft was achieved as John Lewis expanded its operations across an estate that benefits from excellent amenity and is supported by tram and rail connections.

Record year for investment in Manchester offices

Investment activity in the Manchester office market remained buoyant this quarter, with investment volumes totaling £170.10m. Although down 25% on Q3, it brings total office investment for 2014 to over £1bn which is more than double the total for 2013 at £414m. Manchester saw 25% of regional investment in offices in 2014.

Significant deals included:
•    Orchard Street’s acquisition of 4 Hardman Square for £31.02m, reflecting a net initial yield of 4.95%.
•    Rockspring’s purchase of Peter House on Oxford Street for £23.7m, reflecting a net initial yield of 6.00%.
•    Ardstone’s acquisition of Pall Mall Court on King Street for £19.1m, reflecting a net initial yield of 7.02%.

Regions

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