“2022 will see possibly the biggest up-take in city centre office space we’ve experienced for a number of years.” That is the view of commercial real estate consultancy OBI, retained agents on some of Manchester’s landmark commercial developments.
Founder of OBI, Will Lewis, who’s leasing team were involved in transacting over 315,000 sq ft of workspace across 55 deals in the city centre in 2021 said: “Since the COVID-19 pandemic we have seen a shift to a more flexible, hybrid leasing model. Landlords are offering fitted out and furnished workspaces in the sub-5,000 sq ft market – enabling them to charge a premium rent to reflect the fit out and lease flexibility.
“Landlords who are taking the time to engage with their occupiers and create bespoke leasing packages, will be the ones that succeed in 2022, with those who tend to take a more traditional approach being left behind as the market evolves. The quality of a building’s inventory and the landlord’s ability to operate and activate buildings, are now also key factors in the office leasing world.
“Although some businesses are adopting a more hybrid working approach, this hasn’t necessarily impacted the size of space businesses are occupying. We are seeing employers allocate their teams more space per workstation and much larger collaboration and break out spaces than previously seen.”
Analysing the market, current activity and the pipeline, Will added: “We have worked with tech-powered and digital businesses such as ConnexOne and Wejo who have committed to the city and taken larger office space, along with north-shoring and direct inward investment into Manchester.
“Many businesses who move into the city are pin pointing to Manchester because of its population demographic and subsequent large talent pool. We have seen a real shift in those growth businesses with offices in towns such as Cheadle, Stockport and Wilmslow, looking to move their premises into Manchester city-centre, to make their corporations more attractive to younger staff and graduates. This year we have seen the likes of Cloud Imperium Games, Zuto and AutoCab move in from the regional towns and there are more in the pipeline for 2022.
“There has been a shift in some large financial and professional services firms, reducing office footprints and relocating dependant on lease events. However, to date, the amount of larger space being marketed on a sub-lease basis has been limited.”
Founded in 2010 by Will Lewis and Dominic Horridge, OBI has become a big player in the consultancy market. Its landlord and occupier clients include Aviva Investors, Schroders, Allied London, Bruntwood, Kinrise, ARM, Booking.com, AO.com and The Hut Group (THG).
OBI has reported strong rental growth throughout 2021 and expects to see rental growth continue in 2022, with £40 psf to be achieved in Q1.
In the SME space, smaller occupiers (sub 50 people) will be attracted to the flexible leases on offer and fitted out spaces with OBI expecting strong rental premiums to be paid by occupiers for this.
Will added: “There has also been greater take-up for those offices promoting stronger ESG credentials with employers aware that they need high quality space and amenity to attract teams back into physical workspaces following long periods of homeworking.”
Will also predicted that take-up for 2022 will exceed 1.25 million sq ft of office space with ‘agile working not translating into a huge reduction in occupancy across the city’. He did however add that ‘the Manchester office market is not reliable on banks, lawyers and accountants like it was 10 years ago and is now powered by growth businesses in the technology and digital sectors.’
Will added: “With Grade A new build supply diminishing and with limited new build space due to be delivered until 2023, OBI also expect demand for existing buildings providing over 50,000 sq ft to outweigh supply, putting an upward price on rents.”
OBI employs 37 people and provides advice to clients across its multi-discipline services, which include leasing and investment, office acquisitions, business relocations, interior design, project management and dilapidations. The collection of services is known as the ‘OBI Difference’.