More than 1.5m sq ft of office space is now under construction in central Manchester, according to Deloitte’s latest crane survey, after six new schemes started on site in 2017, while the city’s residential pipeline continues to boom.
The largest to get under way in the last year is Bruntwood and Select Property Group’s Circle Square, where contractor Sisk has started on two buildings which will provide 526,000 sq ft between them. Bowmer & Kirkland has also started on Landmark on Oxford Road, which includes 178,000 sq ft of space. The speculative OneTwoFive Deansgate, providing 114,000 sq ft of space, also started on site last year, and is being built and developed by Worthington’s.
Deloitte reported nearly 1m sq ft of office space was delivered last year, an increase of 75% on the levels delivered in 2016, and take-up also remained strong with 912,000 sq ft taken in the year to the third quarter of 2017.
The report also found headline rents remained at around £33.50/sq ft, and said the number of pre-lets had fallen, with only 3.6% of space under construction pre-let.
The split between new build and refurbishment sits at 72% to 28%, and the total pipeline of office schemes with planning permission, which Deloitte classes as “likely to start” during 2018 or early 2019, totals around 3.5m sq ft.
“New office construction is regarded as a key barometer for the economy, the real estate industry, and ultimately, Manchester’s benchmark in its mission to achieve status as a global city,” said Simon Bedford, partner at Deloitte Real Estate. “Manchester’s ability to attract commercial investment has not waned and businesses are demonstrating a desire to settle in the city.”
The crane survey covers central Manchester and Salford, and includes office and retail projects of more than 10,000 sq ft in size, alongside residential schemes including more than 25 units. Research for the report was carried out between 13 January 2017 and 12 January this year.
Overall, there were 32 construction starts in the area last year, ahead of Birmingham with 24 and Leeds with 16.
In the residential sector, the number of units under construction rose by 60% to 11,135, after 20 new schemes started on site in 2017, just two less than the all-time high of 22 schemes which started on site in 2016.
The largest of these is Dandara’s Chapel Wharf at 995 units; followed by Kampus, developed by Capital & Centric and Henry Boot Developments, which includes 536 units. Mount Anvil is the main contractor on Kampus.
It is the second consecutive year that the number of units under construction has exceeded the 2008 pre-recession peak, and the third year of sustained growth in the residential sector. Deloitte also expects 5,000 units to completed in 2018, while around 6,000 units are to be delivered between 2019 and 2020.
The number of units being delivered is significantly ahead of Birmingham at 4,077 and Leeds, which has 1,586 under construction, according to Bedford, who added the survey reflected “unprecedented levels” of building in the city.
He said: “Manchester has firmly established itself as one of Europe’s fastest growing cities. Backed by significant investor confidence, a strong business community, and an influx of new talent, the demand for property, particularly in the residential market, has never been more evident.”
Nearly 600 hotel rooms were delivered across the city last year, including at EasyHotel’s Bradley House, Motel One’s Cross Street site, and StayCity in Gateway House on Piccadilly Approach. There have been five new hotel starts in the past 12 months: Hotel Indigo, built by B&K; 55 Portland Street, being built by Marshalls; the AC Marriott in New Cross; Dakota Deluxe in the Piccadilly Basin; and StayCool on Chorlton Street.
Retail construction also grew significantly, with 63,000 sq ft delivered last year. The level of retail space under construction is now double the levels reported in the 2016 crane survey, and one of the largest schemes under construction is The Ivy, which contractor Bam is expected to complete in the coming weeks ahead of a fit-out.
ISG is also on site at the £11m Halle Place in the Arndale, converting shopping space into 10 new restaurant units around a 25,000 sq ft enclosed square.
Bedford concluded: “The results from this latest crane survey are hugely impressive for Manchester. The city has maintained a strong degree of momentum on the results from 2016, and the level of build in the city centre should be seen as a benchmark for cities looking to grow and develop.
“With the additional investment we are seeing from international markets such as South East Asia, Middle East, and the US, Manchester’s real estate market will continue to develop at scale, cementing the city’s position as a global destination for business, leisure, and education.”