Grade B stock fuels growth in empty space
THE level of void office space in central Manchester is increasing as demand for secondary space declines, according to Colliers.
The firm said that the second quarter of 2012 saw the first increase in available office space in Manchester since the middle of 2009, but this is due entirely to the increase in Grade B secondary stock.
The amount of non-refurbished Grade B stock increased by 16% in the first six months of 2012 and now accounts for 29% of the available space in the market, compared with just over 22% in 2008.
Colliers argues that constraints in the market will eventually see this figure fall as occupiers will soon have no choice but to consider immediately available premises.
The amount of Grade A space available has been falling at 10% year-on-year and is currently at its lowest level since 2007 – 16.8%.
Funding constraints also mean that there is currently little development work taking place.
Rupert Barron, national director of offices at Colliers Manchester said: “With funding constraints remaining tight, the only new scheme of more than 50,000 sq ft set to complete in the City Core up to 2014 is Argent’s St Peter’s Square development – already 25% pre-let to KPMG.
“There are a number of significant requirements that are set to come to the market over the next five years. Jacobs Engineering, Aviva and BUPA – the highest-profile tenant looking to upgrade its existing space.
“The healthcare provider is seeking up to 160,000 sq ft and has already shortlisted a number of schemes, all design & build, including i+ at Spinningfields, First Street, 101 Embankment and the NOMA scheme,” he added.
He said that he expected rents to remain static in 2012 before gradually increasing to around £31.50 per square foot by 2014. Incentive packages are also likely to be reduced.
