MOAF: Manchester take-up drops, big deals still elusive
While the total number of office deals completed in Q1 was up 66% year-on-year, take-up in the first three months of 2022 hit a six-year low for the period, according to figures published by the Manchester Office Agents Forum.
No big deal
A total of 206,700 sq ft of space was transacted in the first quarter of this year across 70 deals, with an average letting size of 3,000 sq ft.
Take-up during the first three months of the year was down from the 347,000 sq ft in Q4 of 2021 and 28,000 sq ft lower than the figure recorded in the same period last year.
The 2022 Q1 total is also the lowest take-up in the first quarter of a year since 2016 as large deals remain hard to come by.
The biggest deal of the quarter was the 11,500 sq ft taken by Telcom at Northstar on Oldham Street. There was only one more deal that exceeded 10,000 sq ft in the quarter, according to MOAF.
Two large lettings to Roku and Cloud Imperium Group at the end of 2021 had given the market confidence that the return of bigger deals was afoot. However, this has not come to pass in the first three months of 2022.
Confidence remains
Agents in Manchester are confident that it is only a matter of time before larger deals return.
Indeed, Aecom looks set to take 20,000 sq ft at 100 Embankment, while flex operator X+Why has agreed to operate 28,000 sq ft in the same building.
Those deals are likely to appear in the take-up total for Q2.
Deloitte’s hunt for a new city centre office continues, too. The company is believed to be looking for between 20,000 sq ft and 40,000 sq ft and is understood to have narrowed its search down to four possible options. M&G’s Lincoln, Baring’s Landmark, Salford City Council’s 100 Embankment and Aviva’s 11 York Street.
Overall, MOAF reports there are around 900,000 sq ft of active requirements floating around Manchester.
“Looking ahead, we are seeing increasing demand from large corporate occupiers looking to commit to acquiring space within Manchester city centre,” said Dominic Pozzoni, head of Colliers’ Manchester office.
“We expect to see these enquiries come to fruition before the end of the year, helping to create a strong counterbalance of activity between both ends of the market and contributing to the continual expansion of Manchester’s thriving office market.”
Pozzoni added that there had been an increase in activity since mid-January when the government lifted its advice on working from home.
“We have seen an increased level of demand and desire from businesses to return to the office, with footfall within the city centre returning to similar levels as pre-pandemic,” he said.
Local support
MOAF’s Q1 2022 report shows a trend of existing Manchester occupiers relocating within the city.
British Engineering Services committed to 7,918 sq ft at Trinity, relocating from WeWork at Dalton Place, while Footasylum doubled its footprint at Federation in NOMA.
Leyton UK moved from 3,500 sq ft at 60 Fountain Street to 6,139 sq ft at Manchester One, and Glenbrook committed to Bruntwood Work’s Union, having seen its headcount increase.
“It is encouraging to see confidence returning to both small and medium-sized business owners following the lifting of Covid restrictions earlier this year,” said Tony Howcroft, partner at Hallams.
“A number of the deals that completed this quarter are long-standing Manchester businesses that are demonstrating their ongoing commitment to the city, addressing their office requirements to make moves that had previously been on hold, as they sought to understand their future needs.”
Howcroft added: “To see a 66% increase in transactions year-on-year in the first quarter sets a promising tone for the rest of 2022 and indicates that Manchester’s office market is thriving once more post-pandemic.”
Aecom could follow X+Why into 100 Embankment. Credit: Place North West
Supply dynamic
MOAF reports that there is 577,359 sq ft of ready-to-occupy grade A office space available across 11 buildings in Manchester city centre.
There is a further 1.16 m sq ft under construction across seven buildings that are due to complete in the next two years, according to MOAF.
Around 500,000 sq ft of the pipeline space is pre-let, leaving approximately 670,000 sq ft available to occupy before the end of 2024 at 4 Angel Square, New Bailey, Enterprise City, St Michael’s and the Island.
MOAF comprises commercial property agencies Avison Young, BE Group, CBRE, Colliers, Canning O’Neill, Cushman and Wakefield, Edwards and Co, Hallams Property Consultants, JLL, Knight Frank, LSH, Matthews & Goodman, OBI, Savills, Sixteen and TSG Property Consultants.
Working from home will kill city centre office building and it’s a win for everyone as no need overpriced office building for employer and no need overpriced and family unfriendly commute for employees.
By Joan Bradshaw
@Joan Bradshaw – its actually looking the opposite long term. People sick of working from home 5 days a week and need to collaborate with colleagues and mix home working with office work. You can’t create a culture on Zoom/Teams, you can’t mentor people and no business will survive long term with people working from home. All business are looking at how the office operates, but actrually spending more money on creating a better workplace for everyone. Win Win!
By IMHO
Anyone thinking they can continue to work from home ad Infinitum is living in fantasy land. There’ll be a bit more flexibility for a while and that’s the best you can hope for.
By Anonymous
Inflated petrol prices and inflated public transportation prices means many low paid office workers will have no choice but to work from home as they simply can’t afford the cost of commuting or cost city centre living
By Anonymous
Currently, there is still a ‘Covid Overhang’ and a lot of people, particularly in the Public Sector, are hiding behind it because working from home 90% of the time suits their lifestyle. The challenge will be when productivity drops off. Not really relevant for the Public Sector, but for the Private Sector who are the cornerstone of the office market, it is crucial. When productivity drops off because Tarquin and Jemima prefer sitting in the garden whilst they deal with the occasional email before doing the school run, we will see a change in attendance expectations.
By Mick T
Totally agree with the comments here and interesting to see. A lot of SME business have a similar attitude to Jacob Rees-Mogg… Thriving teams need to be in the same physical space more than they are in a virtual space.
By Cheshire boy
Not all offices perform the same functions and there are many different types of companies in city centres some of whom need to be there to do business with other businesses and some who could operate from a barn in the Peak District. Some have a high % of fee earners and meeting room space and some have a high % of low paid back office staff. Some functions that some people do can be done from home and some can’t. It’s too early to call as most companies have not yet been hit by the forthcoming recession and it will take a year or so for many large companies to work out what they need to do in a post Covid part WFH world. That said I have not seen many rational arguments that point to a net increase in demand for office space!
By GJ