Market snapshot

Office Market Pulse Manchester Q3 2016

Demand in the Manchester office market has remained resilient post EU referendum, with take-up totalling 266,644 sq ft in the third quarter. With a number of large pre-lets expected to complete in the final months of the year, office take-up for 2016 should hit 1 million sq ft, in line with the five year average. 

The lack of grade A stock still remains an issue and if the anticipated pre-lets complete, just 409,297 sq ft of the office space currently under construction will remain. However, planning has been approved for 100 The Embankment which will bring a further 164,000 sq ft of grade A space to the market.

You can download a PDF version of this here Manchester Office Market Pulse

In this issue:

Steady activity across Manchester in Q3

City Centre office take-up for Q3 2016 reached 266,644 sq ft across181 transactions, bringing the current total for 2016 to 686,172 sq ft. 

Although down 35.2% on Q1-Q3 2015, a number of large scale transactions are expected to complete in the final quarter of  the year including 165,000 sq ft at 101 The Embankment by Swinton Insurance. That should guarantee a yearend total of close to 1m sq ft, keeping in line with the 5 year average.

Several sizeable transactions occurred in Q3 including, 81,293 sq ft to Freshfields at One New Bailey, 11,098 sq ft to Kennedys Law at Churchgate House as well as 11,748 sq ft and  16,183 sq ft to NOMA at The Peninsula and Federation House respectively.

Small scale requirements (space sized below 5,000 sq ft) accounted for 77.2% of the transactions completed in Q3, indicating resilience within the SME sector and consistent with the previous quarters this year.

The out of town markets continued to perform well with take-up in South Manchester reaching 108,595 sq ft in Q3, totaling 360,390 sq ft so far this year, 24.54% below the same period in 2015. The Q3 total of 159,516 sq ft for the Salford Quays market is up 36.6% on the 2015 Q3 total, this is largely down to 93,796 sq ft to AJ Bell at Exchange Quay.  Warrington saw a 6% increase on the same period last year, with a total of 240,596 sq ft.

Demand to fuel further speculative developments

There is currently 1,056,100 sq ft of office space under construction. Freshfields has now completed on 81,293 sq ft at One New Bailey and Swinton Insurance has committed to the entire 165,000 sq ft of 101 The Embankment which is expected to complete in Q4 this year. Another sizeable transaction which is expected to take place in Q4 is the Department of Working Pensions committing to 77,803 sq ft at Two St Peter’s Square, leaving just 41,634 sq ft in this development. 

Such pre-lets will leave just 409,297 sq ft of newly constructed office space available which equates to under 15 months grade A supply. Planning for 100 The Embankment has now been approved and is due for completion in 2018 and will bring an additional 164,000 sq ft to the market which should help ease the diminishing grade A supply.

Key occupational transactions, Q3 2016


Size (sq ft) 

Landlord(s)/ vendor


Exchange Quay, Salford Quays 93,796 Hunter REIM AJ Bell
One New Bailey 81,293 English Cities Fund Freshfields
Federation House 16,183   NOMA GP  Co-op Digital
Churchgate House 11,098  Helical  Kennedys Law 
The Peninsula   11,748  Peninsula Business Services  Directors Online 

Source: Lambert Smith Hampton 

Incentives favour landlords

The highest rent achieved in Q3 was at 55 Princess Street at £27.50 psf which is a grade A refurbished building. No prime grade A lettings occurred meaning that 2016’s highest rent of £33.50 psf has not been met nor surpassed. Tower 12 achieved its highest rent yet at £25.00 psf. We do anticipate that further prime core grade A lettings will occur before the year end and may even push the current headline rent.

Due to the limited supply of grade A space incentive packages remain low with 6 months’ rent free being offered for a five-year lease.

In the out-of-town markets £22.50 psf was achieved at Blue Tower in Media City indicating that there is still strong demand for grade A space.

Manchester office investment activity

Investment activity in the Greater Manchester office market was significantly up on the previous quarter, totaling £202m. However, this was down to the acquisition of 1 St Peter’s Square by overseas investor Deka for £164m reflecting a net initial yield of 5.25%. 

Other transactions included Derwent Groups acquisition of Cardinal House for £12.5m and LJ Groups purchase of Canada House for £10.5m both of which are in the city centre. 

Appetite in the Greater Manchester area is likely to remain strong although fluctuations in activity and confidence are inevitable as Brexit discussions play out.

Key investment transactions, Q3 2016


Value (£m) 



One St Peter's Square 164 DEKA Immobilien Argent Developments
Cardinal House 12.5 Derwent Group Holdings Private Investor
Lakeside 5000 8.3 Seneca Partners & Perscitus Advisers
Henderson PAIF

Source: Lambert Smith Hampton 

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Josh Levy

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Josh Levy
Director - Office Advisory

0161 242 7061

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