Short supply to trigger soaring Grade A rents
PRIME rent for Grade A office space in central Manchester will reach £33.50 per sq ft by the end of 2015 and peak at £35 per sq ft in 2018, according to real estate advisers Colliers International.
The increase in rental levels – detailed in Colliers’ Net Shock Absorption (NSA) report – is being driven by the ongoing shortage of Grade A office space in Manchester city centre as demand from potential occupiers continues to outstrip supply.
Available Grade A space fell by 38% in 2014 with take up reaching a record level as 1.4m sq ft of deals were transacted in the year.
The strong level of transactions was driven primarily by a requirement for 20,000 sq ft-plus units with 10 such deals in 2014 compared to three in 2013.
The overall lack of Grade A space persisted despite the provision of 176,000 sq ft at Argent’s St Peter’s Square scheme – where a headline rent of £32 per sq ft was reported to have been paid by law firm DLA Piper on 45,000 sq ft.
The NSA research warned that the imbalance of supply vs demand will persist in 2015 and into 2016-2017 as little new Grade A space becomes available – with a consequent increase in headline rental levels.
Associate director, national officers at the Manchester office of Colliers, Nick Nelson said: “Delivery of new space will be negligible during 2015, which will increase the downward pressure on Grade A vacancy. A situation where there is very little new Grade A supply available is now anticipated to exist by the end of 2015, persisting well into 2016/17.”
