The city’s status as Britain’s second city is under threat due to a lack of grade A supply and shortage of large scale occupational activity, according to our latest Greater Manchester Office Market Report 2012.
City centre take-up down 8% on 2011 figures
Total city centre take-up for the year is expected to reach approximately 650,000 sq ft – a 30% decrease on the five year average and 8% down on last year. David Thwaites, Associate Director in our Manchester office, said: “Although down on the long term averages, city centre take-up is currently up on last year’s Q3 figures albeit at the smaller end of the market. However, in the absence of any standout large transactions, it’s unlikely to exceed last year’s figure of 700,000 sq ft.
South Manchester and Old Trafford markets remain strong
“The city centre has missed out on the large corporate activity which has enabled other North West markets, most notably South Manchester and Old Trafford, to enjoy strong years. With grade A city centre transactions totalling only 30,361 sq ft at the end of Q3, it is clear that the shortage of available grade A accommodation, coupled with continued uncertainty within the economy, is still deterring larger occupiers from relocating and as a consequence making the city’s status vulnerable.”
Take-up of 1.3m sq ft across the city centre, South Manchester and Salford Quays
Within the regions three main markets (Manchester City Centre, South Manchester and Salford Quays), there is a projected take-up of 1.3m sq ft. This sits comfortably ahead of its closest rivals Edinburgh and Birmingham with projected take-up of 950,000 sq ft of 750,000 sq ft respectively. However, its position could be under threat due to the lack of choice for buildings that can deliver sizable grade A accommodation. This offers cities such as Leeds and Birmingham the opportunity to steal a march by satisfying any footloose national enquiries.
Significant city centre developments in the pipeline
Despite the risks, Manchester remains the key office location outside of London and is increasingly being marketed on a global scale. David added: “Several large organisations, such as BUPA and Jacobs are considering city centre opportunities for their property requirements. In addition, the likely completion of ‘Project Tomorrow’ comprising 180,000 sq ft within 20 buildings on behalf of an undisclosed high tech global company, will be a major boost for the city. This, coupled with significant inward investor occupiers such as WorldPay, should ensure a strong start to 2013.”
Most active regional city for eighth year running
Greater Manchester will retain its status as the most active regional city for the eighth year in a row, due to its excellent national and international transport infrastructure, university offering, high quality workforce and superior level business and recreational services. However, the city needs this momentum to continue to safeguard its position.
Infrastructure improvements are making Manchester more accessible than ever
David concluded: “Strong accessibility has always been a benefit offered by the city, and the planned Northern Hub infrastructure works will result in Manchester becoming even more accessible than ever before. Occupiers locating within the city will be able to benefit from labour forces across the North West, North Wales and Yorkshire. This flexibility is the key contributor to future success within the city and the main reason why Manchester is an attractive location for companies to invest within. However, the lack of grade A space may still hinder Manchester in keeping its position as the UK’s second commercial city.”