Manchester’s office space market sees landmark reversal

Manchester city centre is experiencing a rising demand for larger office space, according to new research.

In the first half of 2015, central Manchester saw seven deals that involved more than 20,000 sq ft of Grade A office space. In comparison, the whole of 2014 saw 10 such deals signed.

Around 60% of the total space let in Q1 2015 was for 5,000 sq ft of space or more, with the figure rising to 65% in the second quarter, according to research from global real estate firm Colliers International.

The company’s Manchester-based director of national offices, Peter Gallagher, said the results represent a landmark reversal of Manchester’s status as a market dominated by a demand for suites comprising under 5,000 sq ft.

He commented: “In 2014 about 80% of all the space let in central Manchester was for office suites of less than 5,000 sq ft. This year the situation so far shows a dramatic change in that pattern.

“As there is a significant number of large occupier requirements in central Manchester still to be satisfied, it may be that the city is becoming more of a large office suite market.”

Colliers International’s latest Net Stock Absorption office market research showed that Manchester saw a total take-up of 667,857 sq ft across 152 deals in the first six months of 2015. The occupancy level saw the city’s supply of Grade A space slashed by 43% to 131,393 sq ft, which is the lowest the figure has been since before the recession.

Speaking further about the findings, Peter said: “Manchester’s success, at the epicentre of the Northern Powerhouse, is because of a diverse range of business sectors already resident, its transport and higher education infrastructure, a cosmopolitan retail and leisure offer and its ability to continually attract both inward investors and to grow existing occupiers.”

The firm’s research also showed that Salford Quays performed strongly. The area saw 436,443 sq ft taken up in the period with average rental levels rising to £22 per square foot, an increase of 5%.

Now, Colliers is expecting the pressure on the city centre’s office space to ease off as more Grade A options, including such schemes as 2 St Peter’s Square and Allied London’s 1 Spinningfields, become available between now and 2018.

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