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Content specialist in office design and build.
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In the most recent quarter, take-up in Manchester reached a total of 351,000 sq ft which represented a ~20% increase on the ten-year average and 8% up year on year. There were 14 transactions totalling 184,000 sq ft for prime and Grade A space and these deals accounted for 52% of the total take-up in the same period.
These transactions reinforce the appetite for high-quality space in the Manchester market, which is currently undersupplied. The availability of Grade A space dropped to 2.5%, while comparatively the rest of the market saw an increase to 10.2%. The total available space in Manchester was 3m sq ft at the end of 2023, with the overall vacancy rate standing at 11.5%.
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Prime rent in Manchester
Prime rent in Manchester rose to £43 per sq ft in the last quarter, making it the UK’s highest-renting city outside of London with an annual growth rate of ~9%.
Download The Manchester Office Rent Report 2024 to learn about our outlook for commercial space in Manchester, including a detailed map and highlights of the current trends.
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The cost of office space in Manchester 2024
Location Grade A Rent (per sq ft) Grade B Rent (per sq ft) Central Core £33.00 - £43.00 £26.00 - £32.00 Spinningfields £33.00 - £37.00 N/A Ancoats and Northern Quarter £26.00 - £32.00 £20.00 - £26.00 Piccadilly £32.00 - £34.00 £22.00 - £32.00 Salford Quays £24.00 - £27.00 £16.00 - £22.00 Media City £23.00 - £26.00 N/A Manchester Airport £23.00 - £28.00 £17.00 - £26.00 These costs are a guide provided by local commercial property experts and rent reports. These costs are updated each quarter and are subject to change.
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Vertical market activity
The most recent figures show that the Professional Services sector was the most active with deals in the sector accounting for 32% of all transactions. The largest transaction for this sector was for 28,000 sq ft at 1 St Michaels for law firm Pinsent Masons.
Elsewhere, TMT (17%) and Public Services, Education and Health (16%) were the other leading sectors in terms of new deals, with Arden University taking 42,000 sq ft at 2 Hardman Street as the most notable transaction.
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Demand for Grade A space
The demand for high-quality office space in Manchester has been trending in one direction for the last few years with the proportion of Grade A take-up leading the transactions in the office market.
4 Angel Square was completed in 2023 and delivered 200,000 sq ft of space, while Four New Bailey, Eden and Bond are all developments due for imminent completion from the development pipeline at an additional 323,000 sq ft in total.
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However, it’s likely that the demand for Grade A space will outweigh supply as an estimated 3,000,000 sq ft of office space is up for renewal in the next two years with new developments standing at a fraction of this.
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What tenants want
Market activity has been dictated by greater take-up for space that is promoting stronger ESG credentials as employers are seeking higher quality space and amenities to attract teams back into the office.
Tenant aspirations for improved building amenities and sustainability accreditations have forced many landlords to refurbish their assets to enhance the offering. Several buildings have improved their communal amenities in the forms of cafes, collaboration areas and wellbeing spaces as part of active investment into these value-add facilities.
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Eden, a new development boasting Europe’s largest living wall across at New Bailey is a perfect example of this. The 115,000 sq ft building has been designed to meet the UK Green Building Council net-zero carbon in-operation targets and aims to promote wellbeing.
Landlords will continue to refurbish their space to improve the offering to new tenants and meet the demand for top office space. The expectation is that Plug and Play space will continue to be popular among new tenants and will provide landlords with an efficient solution to reduce voids and rent-free periods.
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The outlook for Manchester office space
There is positivity surrounding commercial space in Manchester, with prime rent increasing by 7.5% over the last quarter. The 5-year forecast shows that top rent in Manchester will grow by a further 8% and reach £46.50 per sq ft by the end of 2027.
The flight to quality space will continue and as tenants seek out prime office space in and around the city, rates will steadily grow and the desire for poor-quality commercial space will continue to decline. There are several exciting deals and plans already underway, with a total of 923,000 sq ft is under construction across the city for delivery up to 2025 — 68% of which is pre-let.
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Overall, take-up was strongest in the city centre, 16% above 10-year average. While location is important, current trends show that the quality of space is driving activity. Rent rates and the cost of office space are expected to remain significant factors for tenants in the decision-making process but emerging trends show that businesses are not willing to compromise on the quality of space.
For further advice on the Manchester office market, contact our regional workplace experts. They can guide you through both tenant and landlord markets in greater detail.
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Contact us
Get in touch to discuss your potential office space costs
020 7553 9500
info@oktra.co.uk
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