DTZ: Expect 500,000 sq ft take-up in new-build offices
Around half of the 1m sq ft of offices being built in Manchester city centre will be pre-let or under offer by the end of 2015, according to DTZ.
Speaking at the property consultancy's 2015 outlook event in Manchester this morning, Bruce Poizer, senior director of investment, painted an optimistic picture of the office market in the coming year.
Speculative developments currently underway include 167,000 sq ft at Ask Developments' 101 Embankment, Mosley Street Ventures' Two St Peter's Square with 160,000 sq ft, and Muse Developments' 120,000 sq ft One New Bailey.
With 1m sq ft due to complete by the end of 2017, Poizer acknowledged that some around the market may be fearful of oversupply. However, he said that he expected half of the pipeline to be let in the next 12 months.
In the wider office market, Poizer predicted rental growth in Manchester assets of up to 3%, with rents reaching around £35/sq ft. Currently rents in the city's prime office core are around £32/sq ft.
Poizer pointed to secondary office assets as having considerable scope for yield compression and a high return on investment for purchasers.
In the logistics and industrial market, Poizer highlighted the growing demand for a mix of larger distribution warehouses close to transport hubs, and smaller units near to residential areas for the click-and-collect e-commerce market.
At Harworth Estates' 4m sq ft Logistics North in Bolton, on which DTZ is the letting agent, Poizer said that deals were expected to total 1m sq ft by the end of the first quarter of 2015, following a 600,000 sq ft agreement with Aldi and 100,000 sq ft to MBDA at the end of 2014. There is around 400,000 sq ft currently under offer.
Fergus Hicks, associate director in the DTZ research team, gave an overview of the national property sector, with $28bn of foreign investment earmarked for the UK market in 2015. With international investment totals driven largely by deals outside of Greater London, and Manchester yields not quite compressed to pre-recession levels, Hicks expected assets in the city to continue to attract foreign money.