Fears that Manchester's city centre office market faces a period of over-supply are justified, said a report by Colliers CRE, with demand for pre-lets wavering.
The Manchester Office: Spring 2008 report showed take-up of 966,683 sq ft for the city centre in 2007, a 20% rise on the previous year.
However, the reports reaffirms agents' jitters in the city that there is 1m sq ft in the development pipeline to complete in 2008 and an additional 1.1m sq ft with full planning permission scheduled for 2009-10.
The report, by Stephanie Mullenger, Chris Loxton and Guy Grantham at Colliers, states: "The healthy level of cpmpletions in 2007 should be repeated in 2008 with close to 1m sq ft currently under construction and scheduled to complete in the next nine months.
"Of greater concern is the relative lack of pre-letting activity in the market place. While a scheme such as Three Piccadilly Place, due to complete in May 2008, has already secured tenants for over 75% of the space, the majority of projects are still fully available."
The report continues: "Demand from occupiers seeking larger premises will be critical in helping to drive absorption levels in 2008."
Colliers said just 12% of new space set to complete this year has been taken. The total office stock of Manchester now stands at 16.2m sq ft, a rise of 5% over two years.
The proportion of Grade A stock has also risen; 14% in mid-2006, compared with 21% in the second half of 2007. That proportion will almost certainly rise given the levels of due completions.
Availability of office space has fallen by 3.4% over the past 12 months to 1.8m sq ft, its lowest level since 2005. Availability within the core central business district rose by 44%, or 254,000 sq ft, in the past 12 months.
Prime net rents, excluding incentives and small suites, remains at £28.50/sq ft, the report said.
For a copy of the report go to the Resource Library.