Savills: Office lettings in 2015 to match 2014 levels

Prime office rents in Manchester city centre will reach £37/sq ft by 2019 according to real estate advisor Savills, led by a limited supply of stock, high levels of active demand and record London rents driving occupiers North.

With 663,525 sq ft of office space let in Manchester in the first half of 2015, Savills predicted that the city is on track to match last year’s total of 1.3m sq ft which was the second highest level in 15 years.

With continued pressure on supply, Savills estimated that total Grade A availability in Manchester’s central business core has fallen below 500,000 sq ft for the first time since 2007.

For the best quality space, availability is even lower at around 260,000 sq ft. Savills said that this scarcity of prime stock is likely to push headline rents in the city centre up to £34/sq ft by the end of this year and continue to drive them upwards until at least 2019.

In the investment market, Manchester recorded transaction volumes of £298m in the first half of this year. While this is half of the £596m total of the first half of 2014, Savills said that it is still higher than the average annual total for the preceding six years.

Prime city centre office yields have remained stable throughout the first half of 2015 at 4.75%.

James Evans, office agency director at Savills, said: “The level of active requirements in Manchester remains healthy, driven by both local and national demand. Like last year, business and consumer services firms have been most acquisitive but we have also seen a notable increase in requirements from the legal sector. The effect of ‘Northshoring’ is starting to be felt as London-based law firms such as Freshfields look to take advantage of the lower property and staff costs on offer here.”