Manchester’s Grade A space "will run out in two years"

MANCHESTER is in danger of losing its competitive edge in the market to relocate major investors due to the lack of new office space, according to Jones Lang LaSalle.

The firm’s latest Big Six report into the major regional office markets has shown that the amount of Grade A space within the city centre has fallen below the average in comparable cities to 2.8% and is set to run out completely by 2014.

It said the only new development activity in the city centre is being driven by pre-lets and that there are already limited options for larger occupiers.

Chris Mulcahy, director of Jones Lang LaSalle’s Manchester Offices team said: “Manchester needs major national and international relocations to fuel its economy and these historically work on a short lead time.  

“Currently, we only have two sizeable Grade A buildings in 4 Piccadilly Place at 110,000 sq ft and the former Halliwells’ building in Spinningfields at 180,000 sq ft to offer this market.

“However, we have construction well under way at the Co-operative Group’s new 320,000 sq ft HQ office due to complete this year and the speculative element of 200,000 sq ft at Argent’s One St Peter’s Square following the pre-let to KPMG which will deliver much needed Grade A space to the city.”

He added that he expected deals led by pre-lets such as KPMG to continue over the next two years.

“Only six new office schemes started speculatively last year across the Big Six cities with just circa 600,000 sq ft currently under construction.  New construction is typically only happening when there is a pre-let in place.

“These remain rare and difficult with only five pre-lets agreed across the Big Six markets in the last 24 months.

“Although some inward investors like Aegis at Bruntwood’s City Tower will be satisfied by the provision of good quality secondary space which is well located, others will seek high profile Grade A buildings.  Other cities can provide this, either in the UK or Europe, so the city may lose out.”

He added there were also a number of “indigenous requirements” driven by existing lease expiries driven by the likes of BUPA (140,000 sq ft) and law firm Pannone (80,000 sq ft).