Consultants predicting positive Manchester property market in 2022
This year will see possibly the biggest up-take in city centre office space that Manchester has experienced for a number of years, according to commercial real estate consultancy OBI.
The firm is retained agent on some of Manchester’s landmark commercial developments, and founder, Will Lewis, said: “Since the COVID-19 pandemic we have seen a shift to a more flexible, hybrid leasing model. Landlords are offering fitted out and furnished workspaces in the sub-5,000 sq ft market – enabling them to charge a premium rent to reflect the fit out and lease flexibility.”
Lewis’s leasing team were involved in transacting more than 315,000 sq ft of workspace across 55 deals in the city centre in 2021.
He added: “Landlords who are taking the time to engage with their occupiers and create bespoke leasing packages, will be the ones that succeed in 2022, with those who tend to take a more traditional approach being left behind as the market evolves. The quality of a building’s inventory and the landlord’s ability to operate and activate buildings, are now also key factors in the office leasing world.”
Although some businesses are adopting a more hybrid working approach, this hasn’t necessarily impacted the size of space businesses are occupying, said Lewis: “We are seeing employers allocate their teams more space per workstation and much larger collaboration and break out spaces than previously seen.”
Analysing the market, current activity and the pipeline he added: “We have worked with tech-powered and digital businesses such as ConnexOne and Wejo who have committed to the city and taken larger office space, along with north-shoring and direct inward investment into Manchester.
“Many businesses who move into the city are pin pointing to Manchester because of its population demographic and subsequent large talent pool. We have seen a real shift in those growth businesses with offices in towns such as Cheadle, Stockport and Wilmslow, looking to move their premises into Manchester city centre, to make their corporations more attractive to younger staff and graduates.
“This year we have seen the likes of Cloud Imperium Games, Zuto and AutoCab move in from the regional towns and there are more in the pipeline for 2022.”
He said there has been a shift in some large financial and professional services firms, reducing office footprints and relocating dependant on lease events. However, to date, the amount of larger space being marketed on a sub-lease basis has been limited.
OBI has reported strong rental growth throughout 2021 and expects to see rental growth continue in 2022, with £40 psf to be achieved in quarter one.
In the SME space, smaller occupiers – below 50 people – will be attracted to the flexible leases on offer and fitted out spaces, with OBI expecting strong rental premiums to be paid by occupiers for this.
Lewis said: “There has also been greater take-up for those offices promoting stronger ESG credentials with employers aware that they need high quality space and amenity to attract teams back into physical workspaces following long periods of homeworking.”
He also predicted that take-up for 2022 will exceed 1.25 million sq ft of office space with “agile working not translating into a huge reduction in occupancy across the city”.
He did, however, add that the Manchester office market is not reliable on banks, lawyers and accountants like it was 10 years ago and is now powered by growth businesses in the technology and digital sectors.
With Grade A new build supply diminishing and with limited new build space due to be delivered until 2023, OBI also expects demand for existing buildings providing more than 50,000 sq ft to outweigh supply, putting an upward price on rents.
