A ‘Future of Manchester’ report published by real estate advisor Savills has said that an additional 3m sq ft of offices and 55,000 homes need to be built in Manchester over the next decade to avoid a deficit.
Savills predicted that the number of office workers in Greater Manchester is set to grow by 36,000 by 2025 as more companies look to ‘north-shore’ or grow their existing presence in the city. To meet this demand, an additional 4m sq ft sq ft of office space will be required in the city within the next 10 years. Over the next three years around 1m sq ft of offices are set to be delivered, and a further 500,000 sq ft of refurbished space in existing buildings is planned, but this still leaves a shortfall of around 3m sq ft between supply and demand.
Savills forecasted that most new commercial space is likely to be delivered around the existing cores of Spinningfields and Piccadilly, but with prime office rents in these locations predicted to rise from £33/sq ft to £37/sq ft by 2019, existing occupiers may begin to find these areas unaffordable.
MediaCityUK and Salford Quays, the Salford/Irwell corridor, Southern Gateway and South Manchester’s business parks all have the potential to deliver more affordable accommodation for cost-conscious occupiers, according to the research, but with current levels of availability there is likely to be a shortage of mid-priced refurbished office space suitable for TMT and SME companies, which will not be filled by the major developments in the pipeline.
At the same time, the resident population of Manchester is forecast to rise by 65,500 over the next ten years, requiring around 9,650 new homes a year. Current delivery is falling some 5,100 below this need, according to the report, which means there will be a shortfall of 51,000 homes in the next decade in Greater Manchester.
The resulting imbalance between supply and demand against a backdrop of an improving economy and the city’s low average house prices, at £111,567 compared to the England & Wales average of £186,553, indicates real growth potential.
James Evans, director of office agency in Savills’ Manchester office, said: “Manchester continues to boom with relatively affordable living and commercial space stimulating continued demand for offices from indigenous, north-shoring and inward-investing businesses. While this is good news for landlords, investors and developers, if we fail to keep pace with demand the city’s ongoing growth prospects could be jeopardised, with businesses relocating or looking elsewhere if they can’t find space that fits their requirements.
“The planning process needs to carefully balance the need for more offices against the equally pressing requirement to deliver more homes, as these new employees will need somewhere to live as well as work.”