Low supply in Manchester attracts speculative office developments – LSH
There is no shortage of viable development sites in Manchester, but the key issue will be the level of occupational demand in the city in the next decade. So says Lambert Smith Hampton in its new research into the market for Manchester office space.
Matt Crompton, joint managing director of Muse Developments, says that while the take-up of offices in Manchester over the past five years or so may appear relatively slow, it has probably outpaced the supply of new speculative office product over the same period. “It will only take a slight improvement in market sentiment for demand to exceed supply,” he adds. As a result, new development is likely to return on the back of pre-lettings – as with the previous two recessions – before large-scale speculation returns.
Developments close to transport hubs such as Victoria and Central Salford are expected to outperform fringe locations, Mr. Crompton adds. The improvements in public transport planned for the next decade and beyond will ensure Manchester has the infrastructure and the integrated public transport network required to attract foreign companies, LSH notes.
Peter Skelton, director of strategic development at Lambert Smith Hampton, thinks that properties will require flexibility in order to accommodate a greater variety of sectors in future. He notes that Manchester’s commercial base has diversified into media and science from the established financial services/professional sector. “We need to ensure that product matches need, which may not be traditional offices,” he points out.
While take-up of Manchester offices is currently at a 10-year low, LSH says it is likely to be the most active regional city again this year – for the eighth year in a row. It continues to have the lowest Grade A supply of any of the top six cities, and as a result has attracted the largest amount of speculative development starting in the city centre at a current total of 290,000 sq ft – well ahead of Bristol and Birmingham at 135,000 sq ft and 120,000 sq ft respectively.
“It is highly unlikely that Grade A supply levels will increase in Manchester until 2014, with only two schemes underway capable of satisfying requirements in excess of 50,000 sq ft. It is an opportunity for the other regional cities to steal a march on Manchester by satisfying any footloose national enquiries,” says LSH.
