MIPIM 2016: Some 625,000 sq ft of Manchester office space is to be refurbished over the next two years in response to healthy take-up, according to Savills.
Grade-B space has accounted for 62%, on average, of the city’s annual take up over the past 10 years. With grade-A supplies running low, the percentage could be even higher in 2016.
Despite growing demand for grade-A office space in the city over the past three years, take-up has been fuelled by larger grade-B occupiers seeking to balance high-quality offices with value for money.
As a result, Savills expects the planned refurbishment pipeline to last a little over two years.
Increased competition for the space is already driving up secondary rents. At Acresfield in St Ann’s Square, for example, the rent has moved from £16.50 per sq ft to £18.50 per sq ft in just over 12 months.
In terms of occupiers, Savills reports that the city’s TMT sector has taken more grade-B space than any other sector over the last five years, agreeing 710,889 sq ft of letting deals. This is a significant increase on the 294,631 sq ft of secondary space let to TMT occupiers in the previous five years.
Grade B demand from professional services and business/consumer services has also been significant, with deals totalling 595,665 sq ft and 546,738 sq ft respectively since 2011.
Clare Bailey, associate director in the research team at Savills, said: “Much has been made of the TMT sector as a rising star and it has indeed grown significantly. However, the term encompasses such a breadth of occupiers that it is perhaps more accurate to think of the growth of ‘new’ occupiers, namely those seeking to capitalise on technology developments and new media.”
James Evans, head of Savills Manchester, added: “This year’s winners will be landlords who can deliver space to the market quickly and therefore capitalise on the current undersupply across all sectors.”
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