Prime office rents in Manchester have experienced a significant surge, climbing to £44 per square foot in the second quarter of 2024.
This trend is anticipated to continue, driven by robust demand from various sectors and a scarcity of premium office spaces.
Driving Forces Behind the Rent Hike
According to property consultancy Avison Young, Manchester has witnessed a 10% year-on-year increase in prime office rents, now reaching £44 per square foot. This rise is propelled by strong demand from professional services, government, and technology businesses, coupled with a noticeable shortage of high-quality office space.
Market Activity in the Second Quarter
Nearly 943,000 square feet of new office developments are underway, positioning Manchester competitively against other UK cities. These new projects suggest a positive outlook for landlords aiming to lease premium office spaces in the near future.
Notable Deals and Developments
The professional services, government, and TMT/creative sectors were key drivers of demand, representing 62% of the total activity. Of particular note, the flexible office space sector alone accounted for 36.6% of the total take-up.
New Developments on the Horizon
These areas are expected to meet the rising demand from the professional services, TMT/creative, and government sectors, reinforcing Manchester’s status as a hub for business innovation and growth.
Microchip Giant ARM’s Major Lease
ARM’s lease brings the St Michael’s development close to a fully let status, underscoring the demand for workspace offering top-tier ESG credentials and first-class amenities.
Future Prospects for Manchester’s Office Market
With the tightening supply of Grade A buildings, headline rents are predicted to continue their upward trend, potentially surpassing £45 per square foot in the coming months.
Conclusion
This trend is likely to persist, with rents expected to exceed £45 per square foot, signalling positive prospects for both landlords and developers.
Manchester’s office market is thriving due to high demand and a scarcity of premium spaces.
Future rent increases are expected, promising lucrative opportunities for landlords and developers.