Forecasts for take-up in Manchester city centre this year should be revised upwards as prospects improve for a couple of large requirements reaching completion, including Bupa and the secretive US technology inward investor known only as Project Digital.
Rob Yates, director of office agency at DTZ, said the previous forecast of around 600,000 sq ft could now be increased past 2011's 700,000 sq ft to 850,000 sq ft. There have been around 300,000 sq ft transacted in the first half of this year and there is expected to be a further 300,000 sq ft of local churn in the market in the second half.
Private health giant Bupa is expected to draw up a shortlist of two contenders for its 160,000 sq ft requirement in the coming weeks and is likely to sign this year, whereas it was previously a 50:50 chance, said Yates.
Likewise Project Digital, a closely guarded secret US consortium advised by Edwards & Co, is understood to have at least 100,000 sq ft under offer in more than 20 buildings in and around Manchester. Landlords have not been told the identity of the occupier apart from to reassure them the covenant is of the highest standard to enable terms to be agreed. The occupier is expected to unveil a revolutionary business technology product in its centres. Edwards & Co has been retained to find buildings for the product launch in London. Project Digital could take a further 70,000 sq ft in Manchester next year.
Research in the DTZ Property Times Manchester Q2 2012 report said quarterly take-up fell to 135,000 sq ft in Q2. The largest deal was the 21,500 grade B letting to the Money Plus Group at Bruntwood's refurbished Riverside on New Bailey Street.
DTZ said the Co-operative Group's move to new headquarters later this year will free up around 380,000 sq ft of secondary space. Grade A availability is likely to fall in 2012, however, prompting prime rental incentives to do the same.
The report said: "Any pre-lets signed in 2012 are likely to require at least a £30/sq ft rent for them to go ahead. The large grade A floorplates to be delivered at the 1 St Peter's Square development in 2014 are likely to increase prime rents in 2013 via pre-lets also.
"There was a greater transactions total in the out of town market in Q2, with a 125,000 sq ft pre-let to Think Money (formerly Gregory Pennington) in Old Trafford. The physical move is expected in late 2013 and will consolidate the firm's operations from various sites in Salford Quays."
Yates added: "The large number of smaller transactions in Q2 demonstrates the indigenous strength of the city's occupier base. The majority of activity was in the Grade B sector of the market where availability is greatest. Disappointingly only one transaction was over 10,000 sq ft, Bruntwood's letting of 21,500 sq ft to Money Plus Group at Riverside."