MOAF: City centre office take-up plunges on Covid

A total of 20 transactions were signed for city centre offices in Manchester in the second quarter of the year, down from 58 in the previous three months, but fringe markets in Salford and Trafford were more resilient recording an increase in take-up.

The latest figures from the Manchester Office Agents Forum show that city centre office-take up was down 75% quarter-on-quarter in Q2, to 75,995 sq ft from 309,212 in the first quarter of the year, as market slowdown on the back of Covid-19 reduced demand.

None of the deals were sized over 15,000 sq ft but there is still a “healthy level of larger requirements circulating the market”, MOAF said.

South Manchester also felt the impact of the pandemic, recording total take-up of 59,972 sq ft, significantly down from the quarterly average of 154,000 sq ft.

However, the fringe office markets of Salford Quays and Old Trafford performed significantly better than other parts of Greater Manchester in Q2, recording a slight rise in take-up to 77,030 sq ft, from 51,670 sq ft in the first quarter of 2020.

Notable transactions included the purchase of the Voyager office scheme (38,943 sq ft) by trade union USDAW for its own occupation, and security firm Marlowe Fire & Security’s leasing of 25,568 sq ft at 5 Central Park.

John Nash, director at Canning O’Neill said on behalf of MOAF: “There is no disguising the fact that take-up in Q2 was low, but I don’t think we could have expected anything else with the country having been in lockdown for the best part of three months.

“However, we can take encouragement from the fact that almost half of the city centre take-up was recorded in June, with deals that would most likely have been instructed pre-Covid, so confidence has not been fully eroded.”

Nash added that activity has picked up significantly over the last 8-10 weeks, with some businesses creating new jobs, so MOAF retains a “positive outlook”.

Rupert Barron, director at Avison Young, added: “The fundamentals of the fringe of the city and South Manchester markets are strong as we enter the post-Covid market, with many benefitting from parking and good cycling routes.

“While the quarterly figures have benefited from a few large transactions, we do expect to see a significant bounceback by the more agile, smaller occupiers in the second half of the year.”

The pandemic and the versatility of technology may have accelerated a migration towards flexible and remote working, but offices “will remain critical to business and the wider economy, whether in the city centre or the suburbs,” MOAF added.

The forum comprises the commercial property agencies Avison Young, BE Group, CBRE, Colliers International, Canning O’Neill, Cushman and Wakefield, Edwards and Co, GVA, Hallam Property Consultants, JLL, Knight Frank, LSH, Matthews & Goodman, OBI, Savills, Sixteen and TSG Property Consultants.