Posted 23 April, 2012 OBI BLOG
The central Manchester office market enjoyed a solid start to 2012. A total number of 61 deals contributed to floor space of 169,891 sq ft being transacted. This is positive in comparison to Q1 2011, where 129,021 sq ft was let across 39 deals. However, take up fell significantly below the 253,000 sq ft transacted during the final quarter of 2011.
OBI have noticed a number of start up businesses and an increase in confidence from smaller organisations expanding from serviced offices to conventional leasing during the first three months of the year. Consequently 38% of the number of deals completed has been for suites sub 1,000 sq ft.
11 transactions were completed for deals in excess of 5,000 sq ft. Bruntwood successfully retained and relocated two existing occupiers (Hempsons Solicitors and Hays) which contributed to 31,208 sq ft (18%) of the take up. These two transactions were the largest two lettings and both occupiers relocated from Portland Tower, freeing up a significant void in a building where Bruntwood will look to undertake an impressive refurbishment.
There were only four transactions that achieved rents in excess of £19.50 psf; two of these deals were pre-lets secured at Allied London’s Tower 12 refurbishment and insurers QBE took 6,800 sq ft at Chancery Place at £30.00 psf. The Tower 12 refurbishment will be completed in May and the finished product will create a unique workplace for Manchester (see Episode 1 of OBI TV). When we launched Allied London’s concept late last year, the local property community was sceptical – the feedback from occupiers has been refreshingly positive and the pre-letting success has confirmed that not every office needs a suspended ceiling!
We recently completed an acquisition on behalf of Liquid Personnel (see Episode 2 of OBI TV) in 52 Princess Street – it’s worth mentioning that Bridge Properties have created interesting and contemporary offices and the building converted an impressive five deals (9,834 sq ft) in Q1.
The hot spots within the city centre were along the Portland Street Corridor where 28 deals (46%) were completed – although the average letting size in this area was small at c.800 sq ft. There is no doubt that Spinningfields continues to have a major impact on the city. The western areas of the city (Spinningfields/Parsonage Gardens/Riverside) attracted 33 new lettings. There were ten transactions completed in the Central Core.
From OBI’s perspective it has certainly been an encouraging start to the year with a number of our refurbishment schemes such as Tower 12, Spinningfields and Riverside starting to take shape and being well received in the market place. Our clients Allied London and Bruntwood have had the confidence to invest in excess of £11M in two quality refurbishment schemes within a few hundred yards of each other. There is no doubt the investment will reap rewards with both schemes well placed for further letting success in the second quarter.
We expect Q2 to build on the solid start to the year and it will be interesting to see how other new refurbishment schemes such as Bow Chambers, Clarence House and 76 King Street will perform as work progresses over the next few months.