Post-summer glow for Manchester’s office market

Manchester’s office market will build on a strong first half of the year on its return from the summer holidays.

The latest Mid Year Review of UK Cities by global advisory group Knight Frank is predicting an equally strong second half period for the sector, with approximately 265,000 sq ft of space already under offer to 14 different occupiers.

The review looks at occupier and investment activity across 10 UK cities.

Manchester’s office sector saw 124 occupier deals completed in the first half of the year, racking up almost half a million sq ft of space – the highest total for three years and on a par with the first half of 2019.

While the public sector – led by the Government Property Agency taking 130,000 sq ft at 9a First Street – accounted for the highest percentage (30%) it was the professional services firms which were most active accounting for 32 deals.

Knight Frank’s head of office in Manchester, David Porter, said: “Interest in the UK cities has held firm, especially for new and good quality space, in particular, those offering a range of ESG-led amenities and majoring in sustainability.

“Development continues to deliver high quality space into many markets with net carbon zero at the forefront of this, widening the appeal of the UK cities to potential suitors.”

He added: “This ‘place-making’ investment will continue, albeit rising build costs are meaning that development appraisals are being scrutinised with even greater vigour. Rental increases are required to reflect this and the enhanced specification requirements demanded by the occupier.”

Of the 10 regional cities, three – Bristol, Birmingham and Edinburgh – have seen rents break through the £40 per sq ft barrier.

For the past 12 months prime rents in Manchester have remained stable at £38.50 per sq ft, although the expectation is that £40 per sq ft will be achieved before year-end.

David added: “Investors have continued their pursuit of regional opportunities, buoyed principally by the upward trajectory of market rents.

“Deal numbers have steadily risen in recent months and investment appetite toward ‘the right opportunity’ never really subsided. The high value sales completed so far in 2022 illustrate this.

“These ‘big ticket’ transactions have ensured that investment volumes at the half way point reached the highest total for four years.”