Manchester facing ‘unprecedented’ lack of available office space

Manchester is facing a significant absence of ready-to-occupy office space in Q2 2016, according to new research.

Data from real estate advisory firm Colliers International, in its latest Net Stock Absorption (NSA) study of Manchester’s office market, has attributed the looming shortfall to the increasing takeup of city office space from local and national companies, as well as overseas firms.

Colliers has reported that office takeup in 2015 hit 1,318,282 sq ft of space across 311 deals, which is just short of 2014’s figures but sits 37.5% above the 10-year average.

Of the 311 transactions, 24 were for more than 10,000 sq ft and accounted for around half of the total, at 657,135 sq ft.

With Grade-A space representing close to a third of all the deals in Manchester last year, the city has seen a supply decline of 61% since 2014, with just 216,000 sq ft of space now available across the city.

Peter Gallagher, a director at Colliers’ Manchester office, said: “Whenever I have been asked to comment on new Grade-A office space at almost any time in the past 25 years I have been able to talk about the choice of available supply, and having that ready-to-walk-into stock to accommodate footloose in-movers has been central to the city’s offer and appeal.

“Today it’s a wholly different story - given the current level of Grade-A office takeup and the expected completion of lease transactions presently under offer, the Manchester office market is likely to experience an unprecedented complete absence of ready to occupy supply of best quality Grade-A space by the middle of 2016.”

He continued: “Even though the amount of consented developments is sizeable, the lack of readiness and availability of funding for a speculative start on construction is likely to delay or disrupt the early delivery of a number of schemes to the market and even those ready to start will not add to supply until at least 2019.

“We further expect that the majority of Grade-A stock currently in-build will also be let well before practical completion, leading to the growth of a well-established pre-let office market in Manchester. People are just going to have to get better at anticipating their space needs a lot earlier.”

A number of new build office schemes are looking to address the imbalance of available office space in Manchester, including projects such as the XYZ Building at Spinningfields, 2 St Peter’s Square and One New Bailey.