MOAF: Improved take-up puts pressure on supply

Manchester city centre continued to show improving take-up in the third quarter, writes Rupert Barron, director of Colliers International and spokesman for Manchester Office Agents' Forum.

Total take-up of office space in central Manchester in the first three quarters of 2012 was 10% up on the equivalent period of 2011. The appetite remains for quality product, with Grade A take-up over the nine month period reaching 89,665 sq ft, putting it on a par with the equivalent period of 2011.

2012 Manchester office take-up (sq ft)

Some large deals are anticipated in the final quarter of 2012 at developments such as First Street and Spinningfields but the overall take-up of Grade A stock reinforces the need to bring forward schemes to satisfy anticipated demand or there will be a shortage of space with the inevitable consequence of rental inflation and potential occupiers discounting Manchester in favour of other cities with available stock.

The average deal size also rose, from 2,811 sq ft in 2011 to 3,465 sq ft in 2012. Average deal size for Grade A space was almost 4,000 sq ft, a rise of 40% on 2011 but close to half the size of the average deal recorded in 2010. Overall availability of Grade A space in the city centre fell for the second successive quarter, down by 1%.

The Old Trafford sub-market enjoyed resurgence with take-up over the nine months of 220,000 sq ft although the letting of 125,000 sq ft to Think Money in the second quarter was the key contributor to the overall figure.

Salford Quays is yet to see a significant improvement in demand in 2012. The Q1 to Q3 take-up in Salford fell to 35,700 sq ft compared to 100,104 sq ft in 2011 and 88,897 sq ft in 2010. South Manchester enjoyed another steady year, performing at slightly above average level for the year so far. While occupiers continue to consider options within these suburban locations there are a few requirements for office space remaining unsatisfied.

The Greater Manchester office market continues to produce a remarkably resilient performance in these very testing times.

When the economy picks up there is a danger that we will lag behind and be unable to seize opportunities because of the general lack of new-build activity to accommodate demand. We are seeing some progress on developments in and around Manchester but there remains a risk of opportunities being missed.

The Manchester Office Agents Forum exists to promote better knowledge of the Manchester city region office market providing accurate market statistics and informed market commentary. Formed in 2009 its current members include CBRE, Canning O'Neill, Colliers International, Cushman & Wakefield, DTZ, Drivers Jonas Deloitte, Edwards & Co, GVA, Jones Lang LaSalle, Knight Frank, Matthews & Goodman, Lambert Smith Hampton, OBI Property, P3 Property Consultants, Savills, TSG Property and WHR.