The first quarter take up is traditionally the quietest part of the year, but the start of 2018 saw a significant improvement on previous years. Although transaction numbers only increased by 10%, from 73 deals in Q1 2017 to 80 deals in Q1 2018, the amount of space transacted more than doubled with a 112% increase to 441,000 sq ft.
This take up figure was anchored with the largest pre-let agreed for over a decade, after HM Revenue & Customs committed to a new 157,153 sq ft building at Three New Bailey in Salford. This acquisition is the first phase of the Government Property Unit’s (GPU) new Manchester Hub.
Other significant transactions include Irwin Mitchell (33,382 sq ft) and CBRE’s (11,309 sq ft) acquisition of the last remaining space within One St Peter’s Square and managed workspace operator Work.Life, committing to the ground and 1st floor at Boultbee Brook’s Core where they will open their first Manchester operation later this year.
Four transactions were secured at a rent of £30.00 per sq ft upwards, with the highest being £31.00 per sq ft paid by CBRE at One St Peters Square. We anticipate that a headline rent of £35.00 per sq ft will be secured before the end of 2018.
There are a number of large transactions under offer which is likely to see a strong second quarter with Odeon (26,000 sq ft), WSP (54,000 sq ft) and Handelsbanken (40,000 sq ft) due to complete in Q2 2018.
With Amazon and Moneysupermarket.com and more recently GCHQ rumoured to be looking at opening offices in the city we expect inward-investment to play a key part of demand in the city centre this year.
The managed workspace revolution also looks set to continue with WeWork reportedly in discussion for a third office and other providers including Ministry of Sound, Runway East, Workspace and others looking for opportunities in the city centre.
Carrying on the trend from last year, Tech, Media & Telecoms remains the most active sector in terms of transaction numbers, with 24 deals resulting in 86,235 sq ft of take up. The largest deal in the sector being to Codethink Ltd who took 15,150 sq ft in the Northern Quarter.
At the end of 2017 we anticipated that the number of transactions in the sub-2,500 sq ft size band would reduce, as small businesses and new start-ups opted for managed workspace solutions, such as WeWork, instead of conventional workspace. In Q1 2018, this trend had yet to become evident, in fact, on a pro rata basis it would appear the number of transactions and amount of space let sub-2,500 sq ft has increased when compared with last year.
There is currently 430,000 sq ft of Grade A supply available in the city centre. 68,000 sq ft is currently under offer leaving just 362,000 sq ft. The average annual Grade A take up, over the last 5 years in Manchester city centre is approximately 350,000 – 400,000 sq ft per annum. Therefore, there is approximately one year’s supply available, with no new development due to be delivered until mid-2019.
The supply figure is being boosted by a strong refurbishment pipeline and occupiers off-loading “grey space”. Royal Bank of Scotland’s One Spinningfields Square (160,000 sq ft) is set to come back to the market later this year after they announced they would be consolidating their occupation into Hardman Boulevard.
Four new build offices are currently under construction at 125 Deansgate (116,140 sq ft), Landmark (175,149 sq ft), 11 York Street (79,165 sq ft) and Two New Bailey Square (188,570 sq ft). 2 New Bailey Square will be completed in early 2020, with the other three available in 2019. Further speculative development is expected to start imminently at 100 Embankment (166,000 sq ft).
Award winning tech recruitment agency calls Tower 12 home31 August 2023
Cubiq Recruitment, an agency that ‘links talent with technology’, has secured 2,124 sq ft of the 10th floor at Tower 12 in Spinningfields, on a five-year lease.