Manchester office investment dominates ‘Big Six’ in 2022

A JLL report shows that the city’s deals accounted for 26% of the 142 completed nationally last year, against the volatility of the government’s mini-budget, rising living costs, and debt.

The average vacancy rate across Manchester, Bristol, Birmingham, Edinburgh, Leeds, and Glasgow dropped from 6.2% in 2021 to 5.5% in 2022, with the number of leases increasing by 19% to 2.4m sq ft.

Although these figures show an overall increase in activity across the six cities, the numbers are below the ten-year averages.

Meanwhile, national investment activity shows a 17% reduction on the 10-year average and a 9% decrease from 2021, totalling £1.6bn.

Elaine Rossall, head of UK offices research at JLL, said: “An overall pick up in activity across our six markets is heartening to see but to be trending below five and 10-year averages suggests confidence hasn’t picked up to the extent we would have liked just yet.

“What’s needed now is economic stability and a clear plan for growth for the regions, which in turn will spur investors into longer-term spending on our cities.”

Investment

Manchester’s office investment market was the most active of the Big Six, recording £421m of sales volumes in 2022 compared to Leeds’ £174m.

However, these figures are a 40% decrease from 2021’s £707m.

La Francaise Real Estate’s £47.5m purchase of Barbirolli Square was the largest deal of last year’s final quarter, according to JLL.

Otherwise, JLL notes that most of the city’s activity was ‘Value Add’ space, whereby assets are repositioned to deliver appropriate working space.

Leasing

A total of 1.2m sq ft of office space was transacted in Manchester in 2022, in comparison to 618,000 sq ft in Leeds.

JLL’s figures agree with the Manchester Office Agents Forum’s report in January, which also noted that the 1.2m sq ft of deals in 2022 was 15% higher than in 2021.

The largest transaction last year was GPA’s 130,000 sq ft lease at First Street, according to JLL.

Supply fell at the end of 2022, with total office vacancies falling from 6.9% in Q1 to 5.4%.

Positively, JLL recorded a total of 890,000 sq ft of workspace under construction at the end of the year, with 545,000 sq ft due to complete this year.

Of the total 890,000 sq ft under construction, 640,000 sq ft is new build.

Manchester’s average rent price increased over the year by around 4%, reaching £40 per sq ft. This increase reflects the demand for higher-quality offices in the city.

Stephen Hogg, head of the North West at JLL, said: “As occupiers continue to prioritise Grade A credentials, we expect to see the pressure pile on an already well-populated prime office space market, pushing rents up even further.”

Find the whole report at jll.co.uk.

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