Posted 24 November, 2015 OBI NEWS
A lot of people thought that Manchester’s office market would struggle to beat 2014, when a near-record 1.3 million sq ft was let in the city centre. Towergate Insurance and TLT Solicitors signed up at 3 Hardman Square, Slater & Gordon took 107,000 sq ft at 58 Mosley Street. NuGeneration and Barclays committed to Piccadilly Place, while First Street netted Gazprom, Trader Media and Ford Capital.
If anything though, 2015 promises to be even bigger. The third quarter saw over 373,000 sq ft let, taking the total for the year past 1 million sq ft, suggesting that 2015 will be a record year. Highlights of Q3 included Global Radio taking 17,000 sq ft, Shoosmiths taking 32,000 sq ft and NCC Group 60,000 sq ft at Spinningfields’ XYZ Building; and Code Computerlove and Urbanbubble taking 13,100 sq ft and 5,900 sq ft respectively at Sevendale House – and that’s just from some of the deals OBI has advised on.
As has been well documented in the property press, there is now something of an imbalance between supply and demand in the city centre. The hiatus in new development caused by the recession has led to an increasing scarcity of top quality options in the city, so in many ways the next wave of new grade A office buildings can’t come to the market quickly enough if Manchester is to continue attracting the juiciest inward investment deals.
There are several projects coming forward that will address the imbalance: XYZ Building (160,000 sq ft) now almost fully pre-let, One New Bailey (125,000 sq ft) where Freshfields are reported to have chosen for their new Manchester HQ, No. 1 Spinningfields, the 167,000 sq ft 101 Embankment and Number Two St Peter’s Square, where Big Four accountant EY has taken 41,000 of the 160,000 sq ft on offer. PwC is to take 50,000 sq ft at the 260,000 sq ft No. 1 Spinningfields. The significant pre-lets already in place at XYZ, illustrate that even well before completion, the best new space is flying off the shelves.
With that in mind, more developers and landlords are seeing opportunities to improve or replace their stock and bring new and expanded space to the market. In recent weeks, Manchester City Council approved the first phase of development at Allied London’s St John’s scheme on the site of the former Granada Studios which will include new workspace in the Bonded Warehouse. Along with St John’s around Albert Square, there are several major refurbishment projects in the pipeline: LJ Group has 71,000 sq ft across four buildings in Albert Square, while Boultbee Brooks has exciting plans for 67-75 and 79 Mosley Street.
Has Manchester ever been “hotter”? Mosley Street Ventures’ £100m sale of No. 2 St Peter’s Square to Deutsche Asset & Wealth Management, agreed more than 18 months before the building’s scheduled completion, shows the rewards potentially in store for developers. We expect to see ambitious office projects coming forward for some time yet.