The shortage of ready-to-occupy office space in Manchester is likely to push rents to record levels, a new commercial survey has warned.
Outside London, Greater Manchester was the best performing office market of Britain’s six biggest cities. Last year it saw a record take-up of 2.1m sq ft — its largest volume since 2001.
But, while there are six speculative 100,000 sq ft-plus schemes currently underway in the city, short and medium term supply pressures are likely to push headline rents this year to £35 per sq ft and beyond, claims Lambert Smith Hampton’s (LSH) annual Office Market Report.
“During the last cycle we saw headline rents of around £28.50 per sq ft,” explained Josh Levy, LSH’s Manchester office agency associate director. “And in this cycle we are already seeing between £30 to £31 being achieved through pre-lets.
“The general investor and developer sentiment in the market remains strong and we are seeing landlords looking at asset management solutions to attract occupiers and in one prime space in the city centre we are currently seeing £33.50 being quoted.”
Levy added that: “Confidence in the market is going to continue and there is a belief that rental growth will continue across Grade A and also in buildings providing substantially refurbished space where demand also remains strong.”
Nationally, office take-up reflected the Manchester figure by overtaking the previous 2001 high. Last year 27.5m sq ft of office space was either leased or pre-let, even though office availability fell by four per cent to just over 52m sq ft. To meet future demand speculative development rose by 19 per cent.
The research also found that across the UK more than 11m sq ft of office space has been earmarked for alternative uses under Permitted Development Rights (PDR) — an area equal to the entire office stock in the Berkshire town of Reading.
