If one were to cast one’s eyes back to 2007 and keep them firmly focused on the spot, one could be forgiven for assuming that Manchester’s office market has enjoyed a steady, if not a meteoric rise, in the intervening 10 years, writes Mark Canning, director, Canning O’Neill.
Prime rents have risen by around 25% and the likes of Spinningfields and more recently St Peter’s Square have evolved into world quality office locations.
If you dared to look down though you would see the intervening chasm lying mid-way through the last decade; which was the world recession.
Manchester was not immune to the impact of recession, and as an agent it was a tough office market to be dealing in, but the strong investment profile that Manchester offices now enjoys is heavily influenced by Manchester’s strong, diverse and vibrant economy that enabled the city to weather the storm better than any of other UK provincial cities.
Manchester offices have made a quantum leap in the past 10 years. Whilst we spent the previous 10 to 20 years talking up inward and strategic investment from office occupiers, it has now really happened. Major strategic relocations and expansions in and into Manchester by the likes of TalkTalk, AutoTrader, Freshfields, 1st Central Insurance, Raytheon, Ford Motor Credit, Clyde & Co, Swinton Insurance, Gazprom etc. have all been real game changers for the city and its office market.
With prime headline rents in the city wavering around the £35/sq ft mark, this is still a staggering 70% discount on prime London West End rents. Add to that the increased cost of staff in the capital and it’s not difficult to see why Manchester is so well placed to go from strength to strength in the future. The recession, which blighted a good part of the last decade has now been largely forgotten.
In the latter part of the last 10 years the ‘residential invasion’ has on the whole been good for the office market. It has stripped out a large amount of generally redundant office stock that would have otherwise laid vacant. What we are now witnessing however is a lack of good quality office accommodation available which is pushing rents up to record levels.
So, what does the next 10 years hold for Manchester? The continued inward investment, ‘Northshoring’ and the city’s dramatic rise in key sectors such as media, technology, digital and science, all mean that the city has more than a bright future ahead. Thankfully, the likes of Embankment, St John’s, New Bailey and Circle Square are all well placed to meet this increase in demand for high quality space.