Market snapshot

Office Market Pulse Manchester Q1 2016

On the back of another robust year of take-up in 2015, demand in the Manchester office market has remained consistently strong in the first quarter of 2016, with occupiers taking less time to commit to new space. Views on rental levels are also more relaxed as occupiers strive to take space of greater quality and are limited to a handful of opportunities in any given size/rent or location bracket.

The lack of grade A stock remains an issue, applying pressure on additional new build developments to come forward. Middlewood Locks is currently preparing to speculatively develop over 100,000 sq ft, which is reinforcing the appetite and confidence of developers in the city. A number of high-quality refurbishments are underway, with many assets purchased in 2015 looking to achieve targets based on achieving rental growth through value-add strategies.

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In this issue:

Demand for city centre grade A stock remains strong

City centre office take-up for Q1 2016 totalled 197,000 sq ft, down 38% on the same period the previous year; however this is likely to improve as we move into Q2, with the imminent completion of Freshfields Bruckhaus Derringer’s letting at One New Bailey. 

We continue to see strong levels of demand for grade A space in Q1 with Arup taking 16,000 sq ft at 4 Piccadilly Place, Kacoo Fashion taking 25,600 sq ft at Fabrica and another pre-let at No1 Spinningfields, where Squire Batton Boggs has taken 28,000 sq ft.

The out of town markets continued to perform well in Q1. Warrington in particular has seen take-up total 91,445 sq ft, up 100% on the same period the previous year. 

Take-up in the South Manchester market totalled 88,978 sq ft in the first quarter – a strong start to the year and  this is expected to continue throughout 2016 as a number of pre-lets are due to be announced.

2016 - The year of office refurbishments

Manchester stock continues to diminish, however we have started to see a slight increase in the availability of grade A stock. This is largely due to 790,000 sq ft currently being substantially refurbished, as landlords seek to increase the rental value of their assets. 

Refurbishments likely to take place this year are 81 Fountain Street, 24 Mount Street and Bruntwood’s Neo Building. 

Three new build schemes are due to complete in 2016, namely XYZ Building, One New Bailey and 101 The Embankment, bringing a total of 436,302 sq ft to the market, however 207,000 sq ft of this space has been pre-let, reinforcing the need for further development to commence.

With the continuing strong demand for grade A stock, supply will remain an issue. Other new developments such as 2 St Peter’s Square and No.1 Spinningfields are not due to complete until 2017 and because of this, we expect to see an increase in refurbished stock in 2016.

Key occupational transactions, Q1 2016


Size (sq ft) 

Landlord(s)/ vendor


No.1 Spinningfields
28,000 Allied London
Squire Patton Boggs
25,600 The Royal London Property Fund
Kacoo Fashion
4 Piccadilly Place 16,000 The Carlyle Group (Ares) Arups
1 Piccadilly Place
10,141 Legal & General
5 New York Street 10,002 Bruntwood Royal Sun Alliance

Source: Lambert Smith Hampton 

Incentives continue to reduce

In 2015 we witnessed a record grade A headline rent of £34.00 psf. This was achieved at Chancery Place and is yet to be surpassed. No.1 Spinningfields achieved £33.50 psf however we are confident that rents will reach £35.00 psf by the end of 2016.

Incentives are still continuing to harden with rent free packages falling broadly back in line with their pre-recession level due to the continuing lack of stock.

New build rents in the out-of-town markets peaked at £24.50 psf in 2015 – this was achieved at Media City. We are yet to see this matched in 2016, however, we expect this may be achieved at Airport City and on a pre-let basis by the end of the year.

The increase in rents is expected to slow as a number of new build developments are delivered to the market.

A strong start to 2016 for Manchester office investment

Investment activity in the Greater Manchester office market was up 66% on the previous quarter totalling £282m. 

However, this was largely down to two major deals within the city, Ares Management LLC’s acquisition of 3 & 4 Piccadilly Place for £115m, reflecting a net initial yield of 6% and Union Investment’s acquisition of XYZ Spinningfields for £85m, reflecting a net initial yield of 4.8%.

Other key deals this quarter included the sale of Metro, Salford to Picton Property Income for £17.6m and Rockspring’s acquisition of The Chancery, Spring Gardens, Manchester for £16.05m. 

We expect activity to slow during the next couple of months as investors exercise caution in the lead up to June’s EU referendum. This does, however, create opportunities for those who know where to look, and investors who can mitigate the uncertainty with strong insight.    

View the latest edition of our UK Investment Transactions (UKIT) report.

Key investment transactions, Q1 2016


Value (£m) 



3 & 4 Piccadilly Place
115 Ares Management/
Property Alliance Group
Carlyle Group
XYZ Spinningfields 85 Union Investment  Allied London 
Metro Trafford 17.6 Picton Property Income BAM Properties
The Chancery 16.05 Rockspring Aberdeen Asset Management

Source: Lambert Smith Hampton 

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Josh Levy
Director - Office Advisory

0161 242 7061

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