Still plenty of Grade A in Manchester, says Colliers

CENTRAL Manchester’s office market retains a good variety of Grade A space  – contrary to reports that supply is drying up, according to a new report by Colliers.

The firm said that there was still a “good choice” of Grade A accommodation – including for floorplates of 10-12,000 sq ft.

Rupert Barron, Colliers Manchester head of office agency, said: “Contrary to competing cities and critics Manchester’s office market hasn’t run out of available Grade A stock or solutions for inward occupiers.”

Second-hand Grade A space available includes the 170,000 sq ft former Halliwells building at 3 Hardman Square, while next year the space currently occupied by Manchester City Council at Ask Developments’ Number One First Street will be handed back.

In terms of major schemes, the report said that 833,000 sq ft – or 50% of the space completed since the start of 2009 also remains available.

However, it added that vacant space will reduce steadily over the next 18 months as positive employment growth continues to feed demand for office space.

The report states that although employment growth in the North West as a whole is set to slow, prospects for the Greater Manchester economy remain much brighter, with “significant upward increases in employment levels” predicted over the next five years.

The city-region’s economy already accounts for more than 39 per cent of total jobs in the North West and is set to grow by 79,000 between 2011 and 2016, according to Colliers’ report. This represents around 70% of overall employment growth projected for the North West.

“Whilst our research highlights the forthcoming shortage of Grade A space there are opportunities for occupiers and landlords – particularly if they are innovative in their approach to space utilization and funding.”

He added that there were plenty of older buildings which could be recycled to provide space as well as a number of “ready-to-go” schemes just waiting on a pre-let.

“A number of active requirements in the market for both existing and pre-lets are helping to maintain confidence and momentum which will attract the attention from the funding fraternity,” he said.

“Overall, Manchester is in better health than many regional cities and is in position to move forward as the economy recovers over the next few years.

“I would not be surprised to see the start of a speculative development shortly.”

Meanwhile, Knight Frank said that the the Manchester office market got off to a modest start in the first quarter with take-up of space reaching 129,021 sq ft. The market was dominated by smaller deal, with London School of Business & Finance’s 25,11 sq ft letting at Linley House on Dickinson Street being the one big deal recorded during the quarter.

Only two other deals completed in the quarter (Gazprom’s 12,000 sq ft at Bauhaus and Marks & Clerk’s 11,000 sq ft at 1 New York St) topped 10,000 sq ft.

Knight Frank presented its findings within its latest Regional Office Market Presentation (ROMP) which found that lettings across the 11 key regional cities outside the South East were down by an average of 14% on 2010.

David Porter, Knight Frank’s head of office agency in the regions, remained optimistic that the market will improve during the second half of 2011.

“There are still sizeable requirements in the market, which should provide a significant boost to take-up later in the year.”