Out-of-town office parks in the region will see rental growth of nearly 3% this year, predicts GVA Grimley in a new market report.
At the end of 2007, prime rents for out-of-town office space in the North West were static at £18.50/sq ft in the South Manchester area, whilst Salford out-of-town prime rents were £19/sq ft. The report found that demand continues but at a smaller scale, with the driving force continuing to be from occupiers seeking sub 10,000 sq ft. The trend continues in the North West for developers and landlords with larger floor plate buildings to speculatively sub-divide in reaction to demand.
Simon Reynolds, director of GVA Grimley, commented: "Given the current economic climate you would expect a sub sector market such as business parks to struggle. However the outlook is positive with increased levels of demand. We are forecasting rental growth of 2.9% in 2008 and averaging 2.5% pa over the next four years with steady erosion in the amount of vacant stock. Underlying this will be a continued trend for flexible leases and tenant inducements driving many deals."
The amount of business park space under construction in the North West has fluctuated considerably over the last three years, from nothing in December 2004 to almost 500,000 sq ft a year ago. The amount of floor space under construction in December 2007 is similar to the previous six months and now stands at 180,000 sq ft. Of space under construction at the end of the year, 88% is being built speculatively, almost all of which is at Cheadle Royal, Liverpool International Business Park and Central Park in Manchester.