Office demand remains healthy in Manchester
Although take-up of office space in Manchester slowed during the first half of this year, demand remains healthy and steady absorption of Grade A space in the city looks set to continue, says Colliers CRE in new research.
The firm points out that office occupation increased by 126,816 sq ft during H1, bringing the 12-month total to 300,861 sq ft. Grade A absorption reached 239,429 sq ft during the first half alone, a figure Colliers CRE describes as “encouraging”. Over the past two years
1.7m sq ft of new and refurbished space has been completed in Manchester city centre, it points out, and during that time around 745,000 sq ft – or the equivalent of 44% of the Grade A accommodation – has been absorbed.
Take-up in the first half was down 30%, but transaction levels during the period were still 40% higher year-on-year, the firm notes. There is still more than 1m sq ft of Grade A office space available in Manchester, which means that more slack needs to be taken up before rental growth can resume, it thinks.
Prime rents have dipped 5.3% during the past year but have stabilised since January at £27.00 per sq ft. Colliers CRE expects the supply of Grade A office space in Manchester to tighten, given the lack of new supply coming onto the market. There is only one major development currently under construction in the city centre and no scheduled completions for the rest of 2010 or in 2011, it says. The firm says quality buildings in core locations should see prime rents rise in early 2011. “We anticipate circa 8%-10% growth in headline rents between 2011 and 2013, reaching a high of £31.00 per sq ft by 2013,” it adds.
