Manchester’s office rents holding steady, say DJD

Manchester was the only UK city outside of London not to see rents on prime office space fall in 2010, according to Drivers Jonas Deloitte's Key Cities report.

The 2011 report highlights that headline rents held steady at an average of £28.50/sq ft throughout the year.

In addition, the consultant noted that a record 20-year high in lettings transactions in 2010 coupled with a lack of new build development could act as a catalyst for new schemes coming forward in 2011-2013.

The report predicts that rents will remain stable this year with a slight fall in take-up after a number of "savvy" occupiers having taken of the favourable occupier market conditions last year.

However, Drivers Jonas Deloitte said that incentive packages were continuing to tighten which will ultimately lead to a rise in net effective rents.

Adam Robson, senior surveyor at Drivers Jonas Deloitte, said: "The supply of Grade A accommodation continues to shrink with a number of larger requirements still circling the market, so the outlook for Manchester this year remains very good.

"The balance of power that we have seen over the last two years is beginning to shift away from tenants towards a more level playing field and this is leading to a lot of buzz about the potential for new development in the city centre once again."

Robson added that investment transaction volume recorded an increase in 2010 with prime office yields stabilising at approximately 6%. This year, it is expected that prime central Manchester office transactions will remain low.

Despite this, DJD does expect that more secondary property will be traded through distressed sales however it considered pricing to be under pressure.

As well as Manchester, the report provides office transaction and investment performance statistics for London, Birmingham, Edinburgh, Leeds, Glasgow.

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