Positive start to 2013 for Manchester offices – Lambert Smith Hampton
Lambert Smith Hampton says the Manchester offices market has made a positive start to 2013, with first-quarter city-centre take-up of 271,000 sq ft compared with 170,000 sq ft a year ago and roughly in line with the 275,000 sq ft seen in Q4 2012.
The lack of available Grade A office space in Manchester has proved a major difficulty for some occupiers, especially those seeking larger floor plates, LSH notes. While the total taken up in Q1 2013 was steady, the quality of space occupied across Manchester has fallen, with Grade C offices accounting for two thirds of the total take-up in the quarter – an increase of 40% from the final quarter of 2012. LSH saw an increase in the number of larger office requirements during the quarter, both in the city centre and out of town. Availability of Grade A space actually rose by 75,000 sq ft in the city centre during Q1 to 1.24m sq ft following the administration of law firm Cobbetts, but out of town the firm says there is a “distinct lack” of readily available floorspace to satisfy requirements from larger occupiers.
The firm expects full-year take-up to reach about 800,000 sq ft, but notes that this does not include the much-publicised Project Tomorrow requirement – which would boost the region considerably if it were satisfied.
While some high-quality space is due to be delivered to the market over the next 12 months, there will be no new-build development until the middle of next year. “With a substantial amount of lease events (approximately 1m sq ft) over the next 18 months providing relocation opportunities, for those occupiers seeking to upgrade their accommodation supply is unlikely to meet demand,” the firm warns.
LSH says headline rents for Grade A office space across Manchester city centre remain unchanged at £30.00 per sq ft, and at £19.00 per sq ft for out of town business park accommodation. Prime incentives remain at 18 months for a five-year term.