Rental levels for prime and secondary office space in central Manchester are now almost double those of city centre Liverpool, according to the latest annual office rents map from real estate advisors Colliers International.
The market-leading research shows that average rental levels for prime or Grade A office space in central Manchester had increased by 6 per cent to £34 per sq foot and in Manchester South by 22 per cent to £22 per sq ft over the past 12 months.
Average rent for Grade B or second-hand office space in central Manchester rose by 2 per cent to £22.50 per sq ft while jumping by 4 per cent to £12.50 per sq ft in Manchester South, according to the annual map.
The rise in the average Grade A rental level for Manchester city meant it was almost double that for central Liverpool which rose by 6 per cent to an average of £18 per sq ft.
Other centres in the North West of England to record rising office rental levels were Salford Quays where the average price per sq ft of Grade A space rose by 5 per cent to £22 and Warrington which enjoyed a three per cent rise in the value of its Grade A office space to £16.50 per sq ft.
All other rental levels for both prime and secondary office space in key centres throughout the North West such as Chester and Preston were unchanged, according to Colliers International.
On a national basis, the research revealed office rents throughout the UK increased on average by 6.5 per cent with prime rents averaging £23.98 per sq ft and secondary at £15.51 per sq ft.
Colliers’ research also showed that across established UK office locations incentives were down 11 per cent year-on-year and are now on average 20 months on a 10-year term for a 10,000-plus sq ft unit.
Peter Gallagher, director national offices at the Manchester office of Colliers International, said: “The year-on-year increase in both Grade A and secondary office space rental values in central Manchester is an inevitable consequence of the ongoing and historic imbalance between rising demand from local, national and international occupiers and an all-time low in the availability of new Grade A space as developers scramble to bring game-changing schemes to market.
“The availability of Grade A space in central Manchester dropped by 15 per cent in 2013 and experienced a further marked decline in 2014, when it fell by 38 per cent year on year despite the provision by Argent of 176,000 sq ft at One St Peter’s Square.
“Delivery of further Grade A space will be negligible throughout the second half of 2015 and into 2016/2017 with consequent and continued upward pressure on headline rental levels and reduction in tenant incentives.”
Mark Taylor, Colliers International head of national offices, commented: “Throughout the country, we are seeing very little differentiation between out-of-town and in-town secondary rents in established office locations.
“The great rental growth we are seeing throughout the primary and secondary markets is due to significantly limited supply. Middle-tier occupiers are now faced with the prospect of having to pay more to be in a better location right now or wait for the delivery of new stock. Regardless, pent-up demand will exacerbate supply shortages and as a result there is a potential for double digit rental growth in certain prime locations and prime buildings.”