Light at the end of the tunnel

It may be hard going, but the market is returning to health as confidence oozes back into the system and developers start building again. Prime rents in Manchester city centre are stable at £306.66 a sq.metre (£28.50 a sq.ft.) but are likely to rise next year as the diminishing stock of Grade A space cuts in. Jones Lang LaSalle’s Andrew Gardiner commented: ”During the third quarter, occupiers in the city centre continued to concentrate on high end Grade A space, using lease events to exploit market conditions and upgrade their space. They are following two strategies of either moving into better accommodation at the same rent or similar accommodation at lower cost.” In fact the current period of recession has allowed companies to upgrade their space at reasonable cost in most parts of the country which will become less feasible as the vacancy rate falls.

In the case of Manchester this is 10.8%. In Gardiner’s view that will mean incentives will be cut in 2011 because of a lack of new development. This view has been reinforced by the figures for third quarter lettings of 65,747 sq.metres (707,719 sq.ft.), close to half of which was to the Co-operative Group.

The outcome for 2010 will be around 28% higher than in 2009, a reasonable result in a year of a recovering economy. What is certain is that Manchester remains high on the agenda of European and international companies seeking space in northern England. An example of this status is that it has moved up to 12th place in the European Cities Monitor compiled by Cushman & Wakefield in the Best Cities to Locate a Business. Andrew Timms of Edwards & Co said: “We have been doing well compared with other regional cities and it will clearly be a good year for the city centre office market.” He suggested that Grade B space was “something of a bun fight” because landlords need to improve the quality of their stock in the next year. His firm is currently involved in a number of substantial lettings which should be completed soon.

The North West Commercial Property Register

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