Manchester’s office market a tale of two tiers

MANCHESTER’S two-tier office market is set to continue throughout 2010 with demand for prime, large floorplates remaining high but a distinct lack of interest in smaller floorplates, according to a new report.

Property consultancy Savills’ latest Manchester office report states that although city centre office take-up rates have increased significantly on last year, this has mainly been focssed on the top end of the market.

According to the firm’s office agency director James Evans, this has resulted in a “noticeable divide in the market and fierce competition between landlords for smaller enquiries”.

“This is set to continue in the short term although with no new completions set for 2010, looking forward we expect that those occupiers seeking to relocate will need to compromise on some of their criteria, the main one most likely being the ability to relocate to one floorplate,” said Evans.

“This should provide some welcome light at the end of the tunnel for landlords of smaller properties.”

The take-up figure for Manchester office space for the first half of the year is 318,004 sq ft – a 37% increase on the first six months of 2009. More than a third of this (34%) was Grade A office space, with the city’s professional sector Spinningfields dominating demand.

Savills predicts that the end of year figure for 2010 will top 1m sq ft, although this will include the Co-operative’s 328,000 sq ft.

The firm added that the only large Grade A space currently on the market is at Piccadilly Place, although this is likely to change once Credit Suisse places up to 180,000 sq ft at Halliwells’ former headquarters at 3 Hardman Square back onto the market.

As a result, headline rents have remained resilient at around £28.50 per sq ft for Grade A, which is likely to incease (or at least see incentives reducing) due to the lack of new development. Savills argued that smaller secondary space is likely to experience a further downward pressure on rents in the short term.