Manchester ‘facing under supply of Grade A offices’
MANCHESTER city centre could be facing an under supply of Grade A office space by the third quarter of 2013, according to the latest market analysis from GVA.
Its Tipping Point report says the level of built and available prime supply in the city centre has decreased from 1.3 million sq ft to 402,000 sq ft in the past four years.
There are now only five schemes that could accommodate and Grade A floorplates of more than 10,000 sq. ft: 3 Hardman Square, 3 & 4 Piccadilly Place, 58 Mosley Street, 40 Spring Gardens and Peninsula. One St Peter’s Square will also be big enough but will not be finished until 2014.
GVA director Chris Cheap said: “With no other schemes anticipated to start on site in the foreseeable future without significant or entire pre-commitment, it is clear that the market at the larger end has a finite level of supply and in the case of the prime core, which has traditionally been favoured by professional occupiers, we are already at a point of under supply.”
In terms of demand, the report highlights that over the last five years, market demand has steadily continued despite the economic downturn with an annual average ‘all grade’ take-up of around 950,000 sq. ft.
Mr Cheap added: “Manchester’s brand on a regional, national and international stage has never been stronger; the demographic back story is compelling for financial services and professional sector organisations. This, in tandem with a strong indigenous professional services community and the emerging digital sector drawn to the city to be close to MediaCity, has meant that demand has continued steadily.
“The last two years have seen Grade A transactional commitment fall in line with the squeeze on supply, however, we consider there to currently be a number of pending transactions which will see Grade A take up reach closer to 200,000 sq ft by the end of the year, which will in turn lead to a further reduction in the built and available supply.
“In terms of future take-up, there is currently in excess of 800,000 sq ft of immediately publicly known named Grade A demand in the market place with several longer term strategic requirements considering the city, which could in theory see this number double. However, this does not take in to account the non-publicised requirements or the potential larger strategic relocations. In addition, our analysis of the larger occupiers’ critical lease events shows a number of potential indigenous Grade A movers entering the market place over the next three years.”
“Based on our research, we believe we could be facing a position of under supply by the third quarter of 2013 as the remaining stock, for varying reasons, may not directly suit the particular requirements of those companies seeking space.”
