Champagne supernova? Manchester office market
CBRE’s UK Office Markets perspective highlights strong occupier and investor desire for office space in Manchester.
Manchester’s booming economy has attracted many companies in recent years. Google, Amazon and the BBC are just a few that have been drawn to the city by the quality of life, talented labour pool, growing population (particularly 20-35 year olds) affordable office space and lower housing costs compared to London (although prices have been increasing!)
Demand in 2018 shows no signs of slowing. H1 2018 was the most active first half in five years for Manchester office take-up and almost repeats the high levels experienced in the second half of 2017. A total of 751,512 sq ft was acquired in H1 2018, 3% higher than the previous six-month period.
This total was boosted by HMRC’s 157,000 sq ft pre-let of Three New Bailey. However, there were also five deals of over 30,000 sq ft. These included WSP Group taking 53,839 sq ft at No.8 First Street, Svenska Handelsbanken acquiring almost 40,000 sq ft at 101 Barbirolli Square and Irwin Mitchell taking 33,382 sq ft at One St Peter’s Square.
The public sector, business and professional services were the key sectors in H1 and more is on the way.. A number of occupiers aim to move in the second half of this year, including MoneySupermarket (30,000 sq ft) and Eversheds (45-50,000 sq ft). These requirements reflect the importance of professional services to Manchester, a sector that has accounted for 20% of take-up so far this year.
There will also be more business from the creative and tech sectors, already based in the city centre, looking to consolidate and expand during H2.
Manchester was identified as the leading UK regional creative location in CBRE’s 2017 Creative Regions report. Amongst the city’s many positive attributes it has: the largest number of creative industries businesses, the largest millennial population, a deep talent pool with a highly skilled graduate workforce and access to universities with strong research and computer science rankings.
Staff and office space costs are relatively modest, whilst earnings to average house prices are reasonable, particularly when compared to London or a number of South East locations such as Oxford and Cambridge. Businesses can also reap huge networking and knowledge sharing benefits from the numerous creative and digital hubs such as The Sharp Project, MediaCityUK, Manchester Science Partnerships and Corridor Manchester.
Manchester offices also remain in high demand from an investor perspective and in many cases the first port of call beyond London. Overall a total of £248m of office stock changed hands during the first six months of 2018, across nine individual transactions. Many of these deals were off market, indicative of a situation where the lack of available investment stock is a concern and beginning to frustrate the market.
Watch this space for further upates on this ‘supersonic’ market…!
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