GVA Grimley: Manchester offices enjoyed strong first half

Manchester city centre's office market continues to experience healthy take-up levels and is on course for an above average year despite the economy's doom-mongers, according to GVA Grimley's half-year report.

Simon Reynolds, partner in the firm's Manchester's office, said: "With some 535,000 sq ft of space taken up in the first six months up to the end of June, the market is performing above its 10-year average on a straight line basis. The statistics show that there has been an increase in smaller size transactions, with 99 out of 125 deals being less than 5,000 sq ft and 11 deals in excess of 10,000 sq ft, the largest transaction was 37,000 sq ft; Your Space at St James' Court.

"But what next, with Manchester's mainstay office market so reliant on the financial and business service sectors? Many pundits are citing an oversupply of new build space, and predicting a doom-laden year ahead. The facts do not reflect this – whilst we have seen literally one or two financial services businesses put moves on hold – M&S and Davenhams for example – we predict that the market will see a further 400,000 sq ft of transactions by the year end, bringing the total to just under the 1m sq ft mark."

The 1m sq ft take-up would be above the 10-year average of 840,000 sq ft. Reynolds added: "A greater proportion of transactions will be in the 30,000 sq ft to 50,000 sq ft range, many of which are at an advanced stage of negotiations. We will see the likes of PwC (70,000 sq ft), Bank of New York (51,000 sq ft) and BDO (35,000 sq ft) sign up for 3 Hardman Street in the next few weeks and at least three floors (60,000) of 3 Piccadilly Place let up.

"Central Government departments and agencies continue to favour Manchester as a place to either expand in or relocate to – there are four or five requirements totalling 150,000 sq ft that are at an advanced stage.

"Office rents will remain stable, with lease terms and incentives much the same as in the last 12 months, potentially the big inducements that have secured the largest deals in recent months will reduce, providing much needed stability to the market."