‘Complete absence’ of Grade A office space predicted

THE director of real estate company Colliers International’s national offices operation, based in Manchester, is predicting an “unprecedented complete absence” of Grade A office accommodation in the city by the middle of 2016.

Peter Gallagher said higher levels of forward planning by occupiers and future reservation of new space was “evident by the emergency of a true pre-let market”.

“We expect 100% of the currently ‘in-build’ Grade A stock to be let before practical completion, fuelling the establishment of a fully-fledged, large space pre-let market, “ he said.

“Although there is 1.34 million sq ft of consented schemes, it is expected that lack of readiness/funding will result in only a limited race to speculatively bring space to market.

“In the city centre, we expect this to comprise less than half of the total consented schemes resulting in a continuing shortage of Grade A office supply.

“This continuing shortage will put pressure on rents. The top rent in the city centre at the end of 2015 is £34 psf and we expect prime Grade A city centre office rents to have reached £35 psf by mid-2016 and £40 psf by the end of 2018.”

Similar problems may face the industrial and logistics sector, said Gallagher’s colleague Julien Kenny-Levick, who is director, industrial and logistics at Colliers’ Manchester office.

He said that although 2016 will see an increase in speculative development, it may not be enough to meet the demands of occupiers in the North West.

“Industrial and logistics demand will continue to be driven by e-commerce with occupier demand expected to be steady rather than spectacular, with omni-channel retailers at the forefront,” he said.

“ Consumer demand for same-day and timed delivery slots will drive further demand for ‘last mile delivery’ urban sheds.”