Headline Manchester office rent to hit £45 per square foot as office market heats up
Prime rents in Manchester have risen by 10% year-on-year, reaching £44 per sq ft in Q2 2024, according to research by property consultancy Avison Young.
This upward trend is expected to continue, fuelled by strong demand from professional services, government, and technology businesses and a lack of quality space.
And according to Matt Pickersgill, Associate Director at Avison Young, the bounce in the second quarter of the year was “a much needed injection of activity” to the city centre office market following what he describes as “a fairly subdued start” to the year.
But he also noted the ongoing influx of serviced office operators either entering or expanding into the city centre with over 120,000 sq ft transacting across three deals, reflective of the ongoing and continued confidence within the flexible office space arena.
With nearly 943,000 sq ft of new developments set to be completed, Manchester’s rent growth positions it competitively against other UK cities, suggesting a positive outlook for landlords looking to let premium office space in the coming years.
“Demand for best-in-class space still remains consistent with the continued interest in the latest new build space with a number of high profile live Grade A requirements expecting to land in the second half of the year,” he said
Pickersgill added: “August’s announcement that global microchip firm ‘ARM’ has taken 69,000 sq ft at St Michael’s and the largest office deal since 2022. This brings the St Michael’s development close to fully let status and thus underpins the demand workspace offering the best ESG credentials with first class amenities. Given the tightening of Grade A supply we anticipate headline rents will continue to rise during the second half of the year and will surpass £45 per sq ft.”
Manchester’s office market saw a total take-up of 506,729 sq ft in Q2 2024. While this is 23% below the 10-year quarterly average, the city centre market performed well, coming in 7% above average when compared to other cities. Key drivers included the professional services, government, and TMT/creative sectors, which accounted for 62% of activity.
St Michael’s Square
Key deals in the quarter included Cubo’s 59,431 sq ft lease at No.1 Spinningfield’s; KOBA’s 28,130 sq ft lease at 100 Barbirolli; S&P Global’s 19,695 sq ft lease at No.1 St Michaels on the 5th floor.
The leading drivers of demand over the past year were the professional services, government, and TMT and creative sectors, which accounted for 62% of take-up.
Demand for serviced offices in the city centre market totalled 121,494 sq ft, accounting for 36.6% of take-up.
Key development areas in Manchester include the city centre, particularly the Spinningfields and St. Peter’s Square districts, where premium Grade A office spaces are under construction.
New developments at First Street and NOMA areas are seeing significant investment, offering modern, flexible workspaces. These areas are expected to cater to a growing demand from the professional services, TMT/creative, and government sectors, positioning Manchester as a hub for business growth and innovation.
