Manchester’s office and resi markets still sluggish, says survey

MANCHESTER has benefited from a surge in new development activity though the number of schemes on site remains way below the peak of the market, according to a new study.

Property consultancy Drivers Jonas Deloitte’s Manchester Crane Survey said that four new schemes around the city’s northern fringe – Greengate, Boddingtons Brewery, NOMA And Water Street – were helping to shape the city’s development pipeline, but that the level of new office delivery stood at its lowest in the survey’s 13-year history.

It also said that vacancy rates in the offices that have been built stand at around 25%, which will mean there is little speculative development that will complete this year.

The survey suggests that residential development is likely to remain sluggish, with last year’s record low of 232 new apartments only just set to be topped this year with the completion of 251 new units at Northern Group’s Ice Plant development.

The student property market remains buoyant, though, with permission being granted for more than 1,200 beds along the Oxford Road corridor – 520 of which will be in Student Castle’s scheme at Great Marlborough Street.

The hotel market also remains strong, with the city’s second Holiday inn Express scheme set to complete at Muse Developments’ Smithfield scheme in Manchester’s Northern Quarter and a Travelodge at the Ask Developments/Realty Estates joint venture on the former Boddingtons brewery site.

Moreover, occupancy levels remain above the UK regional average and Travelodge is planning to build another two hotels in the city this year.

Adam Robson, senior surveyor from Drivers Jonas Deloitte, said: “The lack of new office development provides fertile ground for new opportunities in 18 to 24 months, once existing supply has been eaten up. With nothing on the horizon post-2011, large occupiers could soon be considering pre-lets.”

Director Michele Steel said: “In residential, Manchester was quick to turn off the development tap so low levels of supply have helped absorb the large volume of units we saw complete in the city centre between 2006 and 2007.

“But with the withdrawal of public sector funding for residential developments, it is unlikely that the city centre residential market will see any significant recovery any time soon.”