Office market healthy, says Colliers director
Manchester's supply of Grade A office space is healthy and provides a good choice for occupiers at present, according to latest research from Colliers International Manchester.
Rupert Barron, director of offices national at the Manchester office of Colliers International, said the report contrasted to other opinion that the city had run out of available Grade A stock.
Barron said: "Contrary to competing cities and critics Manchester's office market hasn't run out of available Grade A stock or solutions for inward occupiers.
"Whilst our research highlights the forthcoming shortage of Grade A space there are opportunities for occupiers and landlords particularly if they are innovative in their approach to space utilization and funding.
"In the short term the focus will be on recycling buildings and providing "ready to go" schemes that can be rapidly delivered with funding in place subject securing an occupier for a minimum part.
"A number of active requirements in the market for both existing and pre-lets are helping to maintain confidence and momentum which will attract the attention from the funding fraternity."
The report said funding remains a key issue with a number of sites set to go but unable to proceed because of financial constraints. However, Colliers said a substantial pre-let at any scheme would give the developer a head start on competitors.
Colliers' report said given the shortage of schemes on site, there may be considerable scope for landlords to refurbish or reconfigure existing stock.
The only scheme under construction in central Manchester is The Co-operative Group's new 325,000 sq ft, 15-storey, headquarters office on its 20-acre landholding, bordering Corporation Street and Miller Street, north of the city centre.
The Co-op started on site in the third quarter of 2010 in order to take occupation of the building from around mid-2012.
The Co-operative Group's existing buildings, which will be vacated in mid-2012, include the CWS Building, offering 95,000 sq ft, and New Century House, offering 71,000 sq ft. Colliers said the buildings are prime examples of such opportunities to refurbish or reconfigure stock. Colliers added developers such as Bruntwood have specialised in bringing forward similar refurbishment opportunities.
The report said second-hand Grade A space, such as the former Halliwells' space at 3 Hardman Square, offering 171,000 sq ft, has helped to provide option for those seeking 20,000 sq ft plus floor plates in the city centre.
In addition, Colliers said good quality second-hand space will come back to the market during 2012.
Colliers said the best example of this is Ask Developments' 1 First Street, currently occupied by Manchester City Council on a lease until late 2012 when the Town Hall redevelopment will be completed.
Colliers also expects outer core locations and schemes to benefit from Central Business District space shortages from the second half of 2012 onwards.
The report said Manchester is well placed, given the infrastructure and accessibility between the core and non-core locations.
Colliers said non-core locations such as Central Park and Manchester Airport could offer expanding companies as well as new entrants into the North West market the opportunity to locate within easy reach of the CBD at competitive prices.
The market report added that Greater Manchester accounts for more than 39% of total jobs in the North West.
The report claims Greater Manchester employee numbers are set to grow by 79,000 between 2011 and 2016, representing 70% of total employment growth for the region as whole during that period. Colliers said Manchester's focus as the key driver of the North West economy is set to be enhanced over the next five years.
Barron concluded: "Overall, Manchester is in better health than many regional cities and is in position to move forward as the economy recovers over the next few years and I would not be surprised to see the start of a speculative development shortly."