Manchester's office market take-up remains above average
Friday, 14 October 2016
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Manchester's city centre office market has bucked the national trend and has performed above the five-year quarterly average, according to Bilfinger GVA’s latest Big Nine report.
The quarterly review of the regional office occupier markets highlights that following the EU referendum result office take-up in Manchester, Liverpool and Cardiff were the only markets that were above average in the nine city centre markets.
Overall take-up across the ‘Big Nine’ office city centre markets during Q3 2016 was affected by the uncertainty in the run up to the referendum. Take-up was down 16% on the five-year quarterly average, the lowest quarterly total since 2012. Conversely, the out-of-town markets performed better, with take-up above the quarterly average in five of the nine markets.
According to the latest Big Nine report, city centre total take-up amounted to 1.06 million sq. ft. whilst out of town take-up covered 0.85 million sq. ft. 5% up on the previous quarter.
Professional services made up the highest proportion of deals by sector (28%), followed by financial services (19%) and then manufacturing and industry (17%).
Key Q3 city centre deals in Manchester included Freshfields’ 81,000sq ft commitment at One New Bailey - the largest ever northshoring deal in the city. The purchase of 94,000sq ft by AJ Bell at 4 Exchange Quay in Salford boosted the decentralised market.
Similarly, Liverpool has seen an increase in transactional activity including Liverpool John Moores University recently taking 64,000 sq ft at Exchange Station. There have been three further deals completed at 5 St Paul’s Square.
Chris Cheap, Senior Director and Head of Offices in the North West at Bilfinger GVA said: “The recent recovery in sentiment since the result of the EU referendum is expected to bring an improvement to figures for the final quarter of this year. In addition, the positive effect on headline rents will continue as a consequence of the roll out of the Cabinet office requirements for the Government Property Unit (GPU) across most of the Big Nine cities from H1 2017.
‘In Manchester the recently completed Swinton letting (160,000 sq ft) at 101 Embankment just missed out on being included in the Q3 figures. This along with several other large pending requirements means that the full year numbers are going to be robust and in line with the five-year average of approximately 1 million sq ft.
“Whilst this is partly as a result of the sheer scale of the marketplace it does suggest that the impact of the EU referendum result was more an elongated summer break rather than a major decline in occupier confidence.”
However, Cheap added: “One note of caution in the prime sector is a likely reliance of the market place on the inward movement of larger professional services businesses due to the lack of pending indigenous requirements. The emerging and service sectors will help to fill any potential void but it is important the market reacts and provides product that speaks to this audience.”
Despite the market uncertainty fuelled by the referendum, overall rental levels have held up with no drop in headline rents. In fact, the Big Nine average rent is £28.00, up 3.1% since Q3 2015.
For any further information on Bilfinger GVA’s latest Big Nine report, please contact Carl Potter, Senior Director on 0121 609 8388 or email email@example.com. Alternatively visit our research pages here.