DTZ: Manchester office take-up ahead of the rest

Manchester recorded more office take-up than any other regional city in the fourth quarter of 2010, according to a report from DTZ.

The real estate adviser said total take-up in Manchester in the fourth quarter was 331,000 sq ft, which was around 300,000 sq ft less than the "unusually large previous quarter".

Annual take-up for 2010 reached 1.3m sq ft, which again was more than any other regional city.

DTZ said Grade A space is strongly in demand, partly due to the expectation that it will soon be in short supply, and prime headline rents in the city centre are likely to increase over the entire forecast period as this trend becomes more of an issue.

DTZ said the amount of secondary grade space and below is likely to remain elevated, however, partly because government departments are expected to release space as and when various lease events occur over the next several years.

Compared to the final quarter of 2009, DTZ said there was not the surge in investment activity in the key regional markets in the fourth quarter of 2010.

The report added that a lack of prime product kept estimated prime office yields in Manchester stable in the fourth quarter at 6.0%.

The report said: "Demand for good quality secondary assets with active management potential has increased, partly as a reaction to the broader range of product now being offered to the market at acceptable prices.

"Prime property yields are near their long run average and there is a tentative equilibrium at this end of the market. This is likely to hold in 2011, but with risks still on the downside for most key regional cities."