Headline office rents in Manchester will rise during 2011 as a result of a diminishing Grade A supply and demand for this product, according to the real estate advisor.
In Savills' spring Manchester office market report it said headline office rents in the city will reach £30/sq ft in the year compared to headline rents in Manchester during 2010 which remained at a consistent peak of £28.50/sq ft.
Patrick Joynson, director at Savills, said: "The imbalance between demand for institutional office stock in Manchester city centre and supply will start to place real upward pressure on rents especially as demand starts to pick up. The real issue for Manchester now is finding solution to the inevitable midterm shortage of Grade A space in the market.
"Until the development bubble of mid 2000's encouraged by easily available money the Manchester pipeline had to some extent been self policing. There now are several new schemes being primed to potentially commence in the next 12 months, all dependant on a degree of pre-letting. Those that secure funding and bring forward their developments could enjoy considerable 'first mover' advantage whilst others will be forced to hold off until a later phase of development."
Savills notes that this current lack of new build stock could provide a window of opportunity for the refurbishment of older, larger stock in order to maximise letting potential and inevitably value.
In contrast to the continued demand for large floorplates, Savills reports that supply levels remain much higher for smaller properties of sub 10,000 sq ft highlighting the distinct two tier market in the city.
In terms of take-up, Savills predicts that end of year figures for 2011 will reach approximately 850,000 sq ft.