Manchester city centre office take-up dipped in Q2, says DTZ
Take-up fell back in the second quarter of 2010 to 166,000 sq ft from 191,598 sq ft in the first three months of the year, according to DTZ.
Nevertheless, DTZ said occupier demand still compares favourably with other regional office markets.
Overall availability of office space shot up 26% during the second quarter as a flood of Grade B and C space hit the market and several refurbishment projects completed.
Availability for the two quarters compares as follows:
Q1
- Grade A: 681,000
- Grade B: 1,137,097
- Grade C: 462,602
Q2
- Grade A: 650,000 sq ft
- Grade B: 1,596,721 sq ft
- Grade C: 739,195 sq ft
Rob Yates, offices director at DTZ in Manchester, said: "The office market has experienced an interesting few weeks which has reinforced the view that there is a shortage of new development of the right quality. There is currently over 200,000 sq ft of Grade A space in solicitors' hands and a complete lack of construction. With no likelihood that any scheme will start before Q1 2011 at the earliest, it is clear that some occupiers will be facing an ever-decreasing choice of Grade A accommodation.
"Large floorplate occupiers who do not have a geographical preference have a choice of eight buildings; those seeking 30,000 sq ft in a central location are restricted to two – 58 Mosley St and 40 Springardens – and there is current interest in both which may lead to an early letting. Choice for occupiers seeking small floor plate schemes is equally restricted with only four buildings available in a central location, of which only one is suitable for self-contained occupation – 1 The Avenue. These schemes are more likely to face competition from second-hand buildings such as The Observatory, or refurbishments such as Zenith and 19 Spring Gardens, but even so choice is limited."
Yates continued: "Consequently we are beginning to see early signs of an increase in prime headline rentals and occupiers are now faced with the probability of having to commit to a longer lease term and with lower incentives than would otherwise have been the case. This is the first sign of a rebalancing of the market since 2006, a period during which occupiers have consistently held the whip hand in negotiations and is good news for developers with the prospect of pre-lettings more likely for requirements over 30,000 sq ft."
The Q2 figure does not include the Co-op's 325,000 sq ft headquarters which started on site in July. Manchester's office agents are still debating which quarter's figures to include the deal in this year. With this deal to add, Manchester is still on course for a healthy 1m sq ft take-up year.
