A drop in office supply, speculative shed development and an ‘insatiable’ demand for retail space will all be on the cards in 2016, according to Colliers International in Manchester.
Peter Gallagher, director of national offices at Colliers in Manchester, said: “We expect that current levels of total and Grade A office take-up and completion of lease transactions currently under offer in Manchester will result in an unprecedented complete absence of ‘ready to occupy’ supply in the market by Q2 2016.
“Greater forward planning by occupiers and future reservation of new space is evident by the emergence of a true pre-let market. We expect 100% of the currently ‘in-build’ Grade A stock to be let before practical completion, fuelling the establishment of a fully-fledged, large space pre-let market.
“Although there is 1.34m sq ft of consented schemes it is expected that lack of readiness/funding will result in only a limited race to speculatively bring space to market. In the city centre we expect this to comprise less than half of the total consented schemes resulting in a continuing shortage of Grade A office supply.
“This continuing shortage will put pressure on rents. The top rent in the city centre at the end of 2015 is £34/sq ft and we expect prime Grade A city centre office rents to have reached £35/sq ft by mid-2016 and £40/sq ft by the end of 2018.”
Julien Kenny-Levick, director of industrial and logistics at Colliers, said: “Although 2016 will see an increase in speculative development, it may not be sufficient to meet the demands of occupiers in the North West. Industrial and logistics demand will continue to be driven by e-commerce with occupier demand expected to be steady rather than spectacular, with omni-channel retailers at the forefront. Consumer demand for same-day and timed delivery slots will drive further demand for ‘last mile delivery’ urban sheds.”
David Fox, head of retail agency in the North at Colliers, said: “The retail sector in the North West and elsewhere will continue its steady recovery. Insatiable demand from A3 users will continue to help absorb vacant space and, with mainstream retailers now more comfortable with the complexities of omni-channel retailing, selective expansion and new entrants will create rental pressure in locations other than London. We expect to see more consumer brands following the likes of Apple, Samsung and Dyson in acquiring prominent units to promote their products.”