Market snapshot

Office Market Pulse Manchester Q3 2013

Take-up in the Manchester City Centre office market remained strong in Q3 2013, with 69 transactions comprising 198,766 sq ft, bringing the total for the year to date to 655,108 sq ft. Levels are expected to reach 850,000 sq ft by the end of the year, well above the 2012 figure of 758,000 sq ft and the highest annual take-up since 2010.

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In this issue:

Manchester City Centre take-up on course for three year high

The out of town market has seen take-up increase by 25% from the previous quarter. However, a reduction in demand within Salford Quays and Old Trafford has seen total take-up drop by 28% from 2012’s corresponding period.

The number of transactions remains steady with lettings below 2,500 sq ft continuing to dominate the market. The chief beneficiaries of this have been serviced office operators, who are continuing to expand.

Following a slow start to the year, grade A take-up in the city centre was up 77% on the previous quarter.

Despite evidence of a strong recovery in confidence, overall take-up levels still stand 50% below the long term average.

For a detailed breakdown of Q3 2013 take-up by grade, please click here or on Chart 1 to the left of this article.

Significant Manchester office lettings Q3 2013


Size (sq ft)

Landlord / Vendor  Tenant / Purchaser 
First Street, Manchester


Ask Developments Jacobs UK
Bridgewater House, Manchester


Bruntwood Swinton Insurance
1 Hardman Street, Manchester


Allied London     MediaCom
Southgate one, Cheadle


Orbit Developments ADP

Source: Lambert Smith Hampton

Increase in office supply driven by occupier relocations

Although over 10% of the available grade A supply within the city centre was let in the previous quarter, Premier Food’s vacation from 40 Spring Gardens and the Council’s exit from First Street to reoccupy the Town Hall Extension brought a total of 85,000 sq ft back on the market and increased overall grade A supply levels by 2%.

Grade B supply has remained stable in the past quarter, with the only addition being IVG’s 45,000 sq ft refurbishment  at 35 Fountain Street, the largest available refurbished building in the city centre.

With 31,000 sq ft at 5400 Lakeside, Cheadle Royal under offer and other lettings having completed earlier this year, supply of larger self contained business park accommodation within the South Manchester market is diminishing.

For a breakdown of Q3 2013 office supply by grade, please click here or on Chart 2 to the left of this article.

Quoting rentals rising but headline rents remain unchanged

Although quoting rentals for the best grade A space in the city centre have pushed above £30.00 per sq ft, headline rents have remained unchanged at £30.00 per sq ft for the city centre and £19.00 per sq ft for the wider out of town market.

MediaCity continues to attract a small premium within the out of town office market with headline rents of £21.50 for grade A accommodation.

Prime incentives remain unchanged at 18 months’ rent free for a five year term certain.

For a breakdown of Q3 2013 office rental values, please click here or on Chart 3 to the left of this article.

Office investment activity in the region remains strong

The Greater Manchester office investment market continued to perform well with volumes totalling £46m in Q3. Although a 48% drop from the £95.9m transacted in the previous quarter, it represents a considerable increase from the £10.5m recorded in Q3 2012.

Total activity for the quarter was dominated by WP Carey’s purchase of Trinity Bridge House for £45.25m, reflecting a net initial yield of 6.58%. This highlights the continued appetite for prime city centre stock.

We expect to see increased investment activity in the final quarter of 2013 with a number of opportunities being discussed off market. There is particularly strong interest in Manchester City Centre offices due to increasing confidence in the occupational market.

What does this mean for the market? Find out in UKIT Q3 2013.


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