Take-up in Manchester city centre is expected to reach 1.4m sq ft by the end of 2015, with several significant deals due to complete in the coming weeks.
Big contributors to the total in this quarter will be Addleshaw Goddard, which is due to finalise its lease of 40,000 sq ft within One St Peter’s Square, and international law firm Freshfields Bruckhaus Deringer, which has taken 80,000 sq ft in English Cities Fund’s One New Bailey.
An additional 150,000 sq ft of smaller lettings are also due to complete.
At the end of September take-up in the city centre had reached 1.05m sq ft. The annual total for 2014 was 1.3m sq ft, at the time also a record.
Freshfield’s decision to relocate some of its back-office functions from London to Manchester has been one of the biggest office stories of the year, and many expect it to signal the start of a trend of ‘north-shoring’, as occupiers seek to avoid increasing costs of renting in the capital.
According to Richard Lace, associate director of OBI Property, 2016 could see north-shoring go beyond just the big financial and professional services occupiers.
Speaking to Place North West, Lace said: “In 2016 we should see not just professional services but also tech companies looking to relocate from an overheating London. If you look at the rents being achieved now in the likes of Shoreditch it’s not hard to see the appeal.
“This year has also seen a consistent trend of smaller professional service occupiers opening their first Manchester office, with a range of deals at sub-5,000 sq ft.”
The year was defined by big investment transactions, according to Chris Cheap, senior director at Bilfinger GVA. “The investment market has stolen the march this year, thanks to the sheer amount that has changed hands,” he said. “This of course links to the occupational market, and is a big contributor to how we are looking at topping 1.3m sq ft for the second year in a row.”
To finish what has been a significant year for office disposals, with £705m recorded by the end of Q3, the sale of Argent and Greater Manchester Property Venture Fund’s One St Peter’s Square to German pension fund Deka Immobilien is due to be finalised before Christmas. The sale price is understood to be more than £130m.
The first half of 2016 looks set to be strong in terms of lettings, with several large requirements in the market hoping to be filled in the next six months. Hewlett Packard is looking at either English Cities Fund’s One New Bailey or Ask Real Estate’s 101 Embankment for 60,000 sq ft of offices. A long-mooted requirement for Lloyds is rumoured to have returned, for around 40,000 sq ft, while MIDAS has been tasked with finding up to 100,000 sq ft for a financial and professional service firm, understood to be Volkswagen Finance, which is currently based in Milton Keynes.
Moneysupermarket.com is looking to relocate out of its long-term base in Flintshire, and is choosing between Liverpool and Manchester for an office of up to 80,000 sq ft.