Manchester has the largest pipeline of Grade A office stock since the recession of 2008, according to the latest office market snapshot by real estate advisors Colliers International.
A combination of major schemes funded and under construction, others with planning consent but yet to start on site and a strengthening pipeline of proposed developments for delivery post 2020 is helping to address the shortage of Grade A space in the city.
The total amount of such space being built and due for completion by 2019 spans approximately 733,000 sq ft across six developments - 2 St Peter’s Square, 1 Spinningfields, 8 First Street, 125 Deansgate (Lincoln House), Hanover NOMA and Landmark, the former Odeon cinema site – with 146,000 sq ft already let, leaving 586,466 sq ft available.
There’s another 1.26m sq ft of yet to start Grade A office space with consent in seven buildings at 11 York Street, 2 Angle Square, 3 Angle Square, Astley/Byrom, 1 Brazennose, 100 Embankment and 2 New Bailey Square.
And projects for delivery beyond 2020 include major mixed-use schemes with high office content - such as the 14-storey office building proposed by Ask Real Estate as part of its planned redevelopment of the 1.74-acre former Bauer Millett car showroom site adjacent to Hilton Tower.
Commenting on the report, Peter Gallagher, director, national offices at the Manchester office of Colliers International, said: “Manchester has always prided itself on having a ready supply of good quality ready to occupy offices available, which has enabled us to compete effectively for large footloose enquiries. Although the current shortage has threatened that ability, the number of projected schemes in Manchester represents the largest pipeline of stock in the city since the recession, although more than half of the schemes due to complete in 2017 have already been pre-let.”
He reiterated Colliers’ previously stated concern that the “acute shortage” of immediately available Grade A office space in central Manchester would result in an “unprecedented complete absence” of ‘ready to occupy’ space until the end of 2017.
Manchester city centre currently has about 150,000sq ft of existing and available Grade A space with the two largest single floor plate suites for immediate occupation being 41,000 sq ft at 1 St Peter’s Square and 22,985sq ft over two floors at 40 Spring Gardens.
The Colliers’ snapshot recorded take-up of 208,233 sq ft of top quality office space in 73 transactions, six per cent above the total for the first quarter of 2016 but with an average transaction size of 2,853 sq ft compared with 4,017 sq ft in the same three-month period in 2016.
Mr Gallagher said the ongoing imbalance between supply and demand of Grade A space will further increase upward pressure on rents - with the best quality accommodation forecast to hit £40 per sq ft by the end of the decade compared to existing headline rents of £35 per sq ft.
The first quarter of 2017 saw take-up of 208,233 sq ft in 73 deals, some 6 per cent above the total for the first quarter of 2016 and in line with the 10-year first quarter average albeit below the long-term quarterly average.
Given the high number of deals, the average transaction size was 2,853 sq ft compared with 4,017 sq ft in the first three months of 2016. Deals of less than 3,500 sq ft represented 81 per cent of the total take-up, continuing a trend witnessed in 2016.
The largest transaction of the first quarter of 2017 saw Travel Jigsaw take 22,196 sq ft at the newly refurbished Spring House at 42-44 Fountain Street followed by Aldermore leasing 12,088 sq ft on the third floor of 40 Spring Gardens.