A number of key deals were signed in the Manchester office market during Q4, which brought a positive end to the year and a considerable improvement on the previous two quarters. There was more depth to the market in terms of number and size of deals in Q4, with total city centre and out-of-town take-up of almost 500,000 sq ft, just below the quarterly average. This brought the 2020 total to 1.3 million sq ft, 37% down on the ten-year average - 800,000 sq ft of which was in the city centre.
BT’s agreement to take 175,000 sq ft at New Bailey was the stand-out deal and a significant boost to the market, although it is a 30% reduction on its original requirement. Further key transactions were a significant boost to the flexible workspace sector as Deloitte agreed a 35,000 sq ft deal at WeWork’s Hanover building and Hana has agreed a 28,000 sq ft letting at Landmark, St Peter’s Square.
There are a healthy number of requirements in the market and we believe that mid-size requirements will rebound in time, as businesses take a view on their occupational needs and the benefits of good quality office space.
There remains a healthy level of pent up demand and despite current restrictions we are confident this will come forward over the next quarter. Reduced near-term requirements mean that we are seeing an increase in availability, which will continue this year. However, we also believe that demand for good quality grade A space will continue as occupiers put value in the quality of their accommodation. This is encouraging for the speculative space completing this year at developments such as Circle Square, the Lincoln Building and 11 York Street. In further positive news BAM have recently started on site at 4 Angel Square, a 198,000 sq ft office development. Plans for further schemes are being actively progressed as some property companies reconsider residential schemes and there are several refurbishment schemes underway.
A new record headline rent for Manchester was set twice in 2020, by Fieldfisher at 1 Spinningfields and Grant Thornton on 14,000 sq ft at Landmark, increasing to £38.50 psf. With relatively robust demand for quality space, we could expect to see rents hold up at the top end of the market and perhaps even grow further.
Out-of-town, there was 272,667 sq ft of deals in the South Manchester market during the year and 226,598 sq ft in Old Trafford and Salford Quays, 52% and 28% below their respective averages. The largest deals were 38,900 sq ft to trade Union USDAW at Voyager in Salford Quays, 25,568 sq ft to Marlowe Fire & Security at 5 Central Park and 23,580 sq ft to Tech Mahindra at The Vic, MediaCityUK.
TAKE UP Q4
349,513 sq ft
Out of Town
147,509 sq ft
£38.50 per sq ft
Out of Town
£24 per sq ft
1.67 million sq ft
TOP FIVE DEALS Q4
KEY SECTOR ACTIVITY 2020
Accountancy & consultancy
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