Office costs in Manchester rising again

OCCUPANCY costs in Manchester’s office market are set to rise by almost 2% this year but still represents good value for money according to a new survey published by property consultants DTZ.

The firm said that rental increases are driving the growth in the cost of office space across UK markets, with property taxes and service charges are also on the increase.
DTZ said that Manchester is now the third-most expensive regional UK city for office space at £4,570 per workstation – behind Edinburgh (£5.000) and Birmingham (£4,800). Cost feel by 3% in Manchester last year as a result of “increased accommodation efficiency”.

Costs are also still way below the peak values reached in 2007 and are only expected to grow by 1.2%-1.9% per year, so are only likely to return to their peak by 2015.

London, meanwhile, is witnessing an increasing in demand and a tightening of supply – rent levels in the West End are rising most quickly with occupancy costs increasing by 5.1% (or £3,670) per annum. Prices per workstation in the West End are set to hit £16,590 by 2015 – making it the second-most expensive financial district in the world (behind Hong Kong).

Prices in the City of London are rising more slowly by around 4.1% and are expected to reach £11,490 by 2015.

Martin Davis, Head of UK Research at DTZ ,said: “There is a big difference in the forecast increase in occupancy costs over the next five years between the London markets and the UK regional markets. Strong growth in London, particularly in the West End, brought about by a short term supply shortage will mean that occupiers will see a faster increase in rental costs here than in regional cities.”

Rob Yates, director of DTZ’s office agency in Manchester (left), said: “Once again Manchester features as a good value for money location in terms of overall business cost. Occupiers continue to look at the cashflow over the length of their lease which will become acute when the International Accounting Standard 37 comes into operation in April 2012.”

Paul Spratt, director of DTZ’s Landlord and Tenant team, added: “Although occupiers in regional cities such as Manchester and Liverpool can continue to benefit from financial incentives from landlords in most markets, the window of opportunity is closing.

“Many sectors of the market in Manchester and the North West will face shortages of stock during the anticipated lag between confidence recovering and the supply of new development catching up.”