Posted 22 July, 2013 OBI BLOG
Manchester enjoied a solid Q2 in terms of office take up which totalled 194,235 sq ft across 65 transactions taking the H2 take-up for the year to 469,038 sq ft. Although, the last quarter lacked any notable large transactions it is worth pointing out that compared to Q2 last year it was up by 50% in terms of the amount of space let.
In terms of the popular areas of the city, the Portland Street Corridor proved successful in converting 16 transactions amounting to 68,563 sq ft (35% of the Q2 take up) . The average headline rent was £13.70 per sq ft in this area. Bruntwood’s St James’ on Oxford Road was a stand out building converting 5 deals and a total of 29,898 sq ft, the largest letting being a 19,000 sq ft expansion of the existing law college BPP.
72% of the deals were completed at rents sub £15.00 psf, and only 5 deals were at rents achieving £20.00 psf plus. These transactions were in buildings based within the Central Core and Spinningfields.
The Central Core converted 21 deals and 53,074 sq ft was let during the quarter. The average deal size being 2,500 sq ft. The Zenith continued its good run securing it’s third letting of the year to Palatine Private Equity at a rent of £22.50 psf.
It was a frustrating quarter in terms of larger transactions – the Jacobs letting (25,000 sq ft) at Ask’s First Street is reportedly very close to exchanging and the eagerly anticipated Project Digital requirement is yet to recieve the green light.
The evolvement of the Northern Quarter as an established business destination has continued, with Argent receiving lots of interest (and soon to be converted) in The Hive scheme and OBI have recently commenced works on the £6M restoration of Sevendale House which will provide circa 60,000 sq ft of high quality workspace towards the end of the year.
In terms of the development pipeline, Mosley Street ventures submitted planning for No. 2 St Peter’s Square, a new c.160,000 sq ft office building which will sit next to Argent / GMPVF’s One St Peter’s Square, which is now beginning to take shape.
OBI’s view is that overall the market is improving and we have noticed tenant concessions continue to harden as the year progresses. There remains a lack of quality product from a new build and refurbishment perspective and those landlords / developers willing to invest in the right product will succeed.
There are a number of large requirements in the market place from the likes of Barclays, Arups and various law firms – all threatening to make a commitment to new space which should see take up during H2 for 2013 be at a positive level.
Will Lewis is head of the OBI Property Offices department and please do not hesitate to contact Will if you would like to discuss the city centre market in greater detail.