New data shows mixed fortunes of NW office market

A REGIONAL office market report from Knight Frank shows the office market is weak in Liverpool but holding up in Manchester.

In Manchester take-up was 274,000 sq ft in the first three months of the year, up on the quarterly average of 197,066 sq ft in 2012, but 7.8% down on Q4. Prime headline rents stood at £30/sq ft and the availability of grade A space was 370,000 sq ft, 13% down on a year ago.

The vacancy rate dipped to 11.2%, lower than other regional cities which are 12-16%. Active requirements are around 700,000 sq ft, up 55% last year. The market saw six deals of more than 10,000 sq ft in the first quarter, with the average deal size just under 5,000 sq ft.

Deals completed included WorldPay taking 22,000 sq ft at 3 Hardman Square, Spinningfields, and Travel Jigsaw taking 63,000 sq ft at Sunlight House.

In Liverpool take-up for the quarter was just 35,000 sq ft, down 65% on the final quarter of 2012, and 42% down on a year ago. Some 28,000 sq ft was down to Bank of New York Mellon taking space at the Royal Liver Building. Headline rents stand at £20/sq ft.

Active requirements increased slightly to 275,000 sq ft and the availability of grade A space slipped to 212,000 sq ft, down 9.8%. The vacancy rate is 15%. Nationally there has been a slight increase in the supply of Grade A space, totalling 3,067,043 sq ft compared to 3,013,043 sq ft in Q4 2012, but this represents a year-on-year decrease of 11%.

A lack of new completions has resulted in double digit falls in Grade A availability noticeably in Birmingham (-33%), Leeds (-14%), Glasgow (-13%), Manchester (-13%), Newcastle (-12%) and Liverpool (-10%).

David Porter, head of Knight Frank’s Manchester office, said: “With virtually no speculative development we are now into a full pre-let market for those occupiers seeking grade A Office space of, say, in excess of 50,000 sq ft, or less in certain regional centres.

“The lack of good quality accommodation is driving interest from some of the larger UK developers who see the more active regional markets, such as Manchester, Aberdeen and Birmingham as an attractive offer outside of London and the South East.  

“The likes of Hines, Development Securities and Tristan Capital are all active in the regions, typically in joint venture developer roles alongside a local property company or local authority.”