Strong start as dealing levels begin to harden

The Manchester city centre office market has enjoyed a strong start to 2013. We have been involved in one of the largest deals in the city for a few years in leasing 64,000 sq ft to TravelJigsaw at Sunlight House on behalf of Warner / Aviva.  Credit Suisee have bagged a large deal at their 3 Hardman Square building in Spinningfields with inward investor WorldPay committing to 22,000 sq ft at a rent of £29.50 per sq ft.

In addition to this, we believe Jacobs Engineering are soon to complete a 25,000 sq ft deal at Ask’s First Street development and the much talked about the ‘Project Digital’ requirement for offices throughout the city sounds like it is gathering momentum and this alone will boost take up by over 100,000 sq ft in numerous sites.

These larger deals have also been supported by a number of smaller transactions which continue to keep the day to day market ticking along. We have let 2,000 sq ft suites in quality Grade A buildings such as The Zenith and Vantage Point at rents in excess of £20.00 – £25.00 psf. Clarence House has recently undergone a boutique refurbishment by owners HIMOR Group and as the floor plates sub-divide, this building looks well placed to succeed in the smaller end of the market.

Throughout recent times, Manchester has continued to outperform other regional cities in terms of sq ft let, however the dealing terms have been relatively soft for the past few years. The start of this year has seen dealing levels begin to harden and lettings have been concluded on improved terms compared to this time last year. We believe that tenant concessions will continue harden during 2013, with concessions looking set to be re-aligned to discounts of 25-30% in relation to the term certain lease commitment.

It is also worth mentioning that although the larger end of market remains relatively thin in terms of demand, the high quality large floor plated buildings continue to be well placed due to the lack of available options within the new build market.

In conclusion, a good start to the year and things look good for the future.

Will Lewis is a Director 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.