Take-up of office space in Manchester hit a five-year high in the first half of 2019, according to the latest research by real estate advisors Colliers International.
The firm’s analysis showed 806,024 sq ft of office space was transacted in the first six months of the year in 124 deals, representing the highest level of occupier demand since the first half of 2014 (801,981 sq ft).
Colliers’ said the second quarter of the year from April to June inclusive represented a particularly strong period of activity, with 491,291 sq ft of office space secured in 26 deals.
These second quarter transactions included the three largest deals for Grade A office space in the first half – the 121,892 sq ft pre-let to co-working group Spaces at 125 Deansgate, 82,000 sq ft pre-let to WPP at Enterprise City, the former home of Granada Studios, and the letting of 50,000 sq ft by WeWork at Hyphen.
The letting of large amounts of space to flexible workspace providers such as WeWork and Spaces showed the ongoing strength of the sector in Manchester, representing 26 per cent of total take-up.
Colliers’ unique analysis of Grade A net stock absorption (NSA) – measuring the change in physically occupied space in a given time period – was positive as supply of Grade A space decreased and occupied space increased.
The research forecast that should transactional demand continue at pace in the second half of 2019, year-end take-up of office space in Manchester could exceed the city’s five-year rolling average of 1.2 million sq ft.
Some 45 per cent (219,891 sq ft) of take-up in the first six months involved Grade A office space, but occupier demand for Grade A remains high because there is now just 116,596 sq ft of ‘ready to occupy’ Grade A space available in five buildings across Manchester.
Although another 1.2 million sq ft of Grade A space is being built, Colliers says that the overall supply shortage is expected to increase Grade A prime rents from the current high of £37.00 per sq ft to £40.00 per sq ft by the end of 2020.
Peter Gallagher, director, national offices at the Manchester office of Colliers International, said: “The ongoing strength of leasing activity in the first half of 2019 including a vibrant second quarter, continues to deplete the availability of Grade A office space in Manchester.
“The city will continue to suffer from growth pains in the second half of the year but 1.2 million sq ft of space under construction across nine locations and the emergence of a future pipeline for delivery beyond 2021, there are indicators of an easing of the imbalance between demand from potential occupiers and supply of Grade A space.”