Posted 22 October, 2012 OBI BLOG
Office leasing activity in Manchester City Centre during Q3 was up compared with the last quarter. Take-up totalled 179,900 sq ft across 65 transactions.
85% of the deals completed were for suites sub 5,000 sq ft and signs of the occupational market still being driven by cost was evident with 60% of deals being at rents sub £15.00 psf.
One of the stand out deals of the quarter involved I2 serviced offices paying £30.00 psf to take 22,066 sq ft at the 3 Hardman Square (the former Halliwells buildings). I2 have enjoyed success in the city since opening an operation at Chancery Place in the central core and the existing fit-out left behind by Halliwells worked well as it could be retained and re-used effectively.
The largest deal of Q3 was Futureworks take of 25,000 sq ft at Riverside. Futureworks is one of Europe’s leading centres of excellence for education in the digital and creative world and operates under a UK university status. It is worth pointing out that activity in the TMT (Technology Media & Telecommunications) sector is beginning to gather momentum across the city.
Although the majority of deals were sub 1,000 sq ft, the Northern Quarter area enjoyed a successful run with 18 transactions being converted. Most noticeable was Reading Room’s decision to take 6,157 sq ft at NQ1 and Fatsoma taking of space at Argent’s The Hive. Rents in the NQ generally range from £9.00 – £12.00 per sq ft.
Following on from securing the largest letting in the first half of 2012, Bruntwood’s Riverside scheme has gone from strength to strength and transacted a further 34,774 sq ft in six deals during Q3. A £5M capital spend has totally re-positioned the office complex to create one of the major office success stories of 2012 – see OBI TV Episode 8.
Spinningfields secured another six deals that amounted to 19% of the take up for the quarter. We continued our success at Allied London’s Tower 12 with another three transactions achieving headline rents of £20.00 psf.
The western area of the city (west of Deansgate) accounted for 42% of the take up with an average deal size of 4,750 sq ft.
The leasing activity in areas to the north and west of the city confirm how the city centre has evolved over recent years. There were 12 lettings within the traditional central core, the largest being AEW taking 6,907 sq ft at Henderson Global’s The Zenith Building (see Episode 7 of OBI TV). Only one deal commanded in excess of £20.00 per sq ft and that was Knight Frank’s return to the central core in taking 3,500 sq ft at 1 Marsden Street, paying £25.00 per sq ft.
There was much talk about the ‘Project Digital’ requirement for offices throughout the city and hopefully this will progress during the final quarter of the year as this alone will boost take up by over 100,000 sq ft.
It was more of the same in terms of the larger market enquiries with the likes of BUPA (160,000 sq ft), Jacobs (90,000 sq ft) and Pannones (80 – 100,000 sq ft) still yet to make a decision on the futures in Manchester.
Will Lewis is partner 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.