Manchester office market bounces back, Big Six property report confirms

A new report shows that Manchester’s office market returned to growth in 2021.

Real estate service specialist JLL published its annual Big Six report which revealed more than £700m of investment into the region.

The report documents the growth of the office markets in the UK’s largest regional cities and revealed that office leasing volumes in Manchester reached 1.1 million sq ft, just 10% below its 10-year average.

It also showed that Manchester accounts for more than a quarter of all floorspace leased across the Big Six – which includes Birmingham, Bristol, Edinburgh, Glasgow and Leeds.

The combined total for the big six cities was 4.1 million sq ft in 2021, 11% below the Big Six 10-year average.

Based on investment, the Big Six saw its strongest Q4 since 2018 (£523m) with £1.8bn poured into regional markets across the year.

In Manchester, £707m-worth of deals took place across the year, buoyed by NatWest’s £292m acquisition of One Hardman Boulevard, the largest single asset transaction within the Big Six.

Occupancy was driven by strong activity in the TMT and professional services sectors which accounted for more than 50% of total take up, including Roku’s leasing of 115,066 sq ft at Circle Square, the largest deal across the Big Six in 2021 and one of the most significant inward investments in Manchester’s history.

The report also showed that the city’s overall vacancy edged up to 6.4% and the new vacancy rate moved up to 2.9% following the completion of two new-build schemes in Q4, The Lincoln and 11 York Street.

However, with occupiers continuing to show a strong desire for sustainable, good quality space, it’s likely this increase in vacancy will soon be eroded.

Headline prime rents remained at £38.50 per sq ft in the fourth quarter, but are expected to break the £40 per sq ft barrier in 2022.

Chris Mulcahy, director (office agency) at JLL North West, said: “Manchester’s office market continues to lead the Big Six in terms of regional office space and our latest report points to a positive post-COVID resurgence, led by Roku’s Circle Square deal which we’re proud to have played a central role in.

“Real estate and infrastructure investment are at the centre of rebalancing the UK’s unequal economic geography, and surpassing pre-pandemic occupancy levels this year is likely to spell good news for the city and regional economy.”