Manchester's office market is set for a strong end to the year, global property giant Knight Frank says in its latest report into the city.
The company's latest Mid Year Review of occupier and investment activity showed the city had a busy first half year, with 124 occupier deals completing. That came to almost half a million sq ft of space – the highest total for three years and on a par with the first half of 2019.
The public sector accounted for some 30% of those lettings - led by the Government Property Agency taking 130,000 sq ft at 9a First Street – but professional services firms were the most active, accounting for 32 deals.
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Currently some 265,000 sq ft of space is under offer to 14 different occupiers.
The Review looks at activity across the UK's 10 largest regional office markets. Just three of those cities - Bristol, Birmingham and Edinburgh – have seen rents go over £40 per sq ft. Over the last 12 months prime rents in Manchester have remained stable at £38.50 per sq ft, but Knight Frank says it expects £40 per sq ft to be achieved in Manchester by the end of the year.
Knight Frank's head of office in Manchester, David Porter, said: “Interest in the UK Cities has held firm, especially for new and good quality space. In particular those offering a range of ESG led amenities and majoring in sustainability. Development continues to deliver high quality space into many markets with net carbon zero at the forefront of this, widening the appeal of the UK cities to potential suitors.
"This ‘place-making’ investment will continue, albeit rising build costs are meaning that development appraisals are being scrutinised with even greater vigour. Rental increases are required to reflect this and the enhanced specification requirements demanded by the occupier.”
He added: "Investors have continued their pursuit of regional opportunities, buoyed principally by the upward trajectory of market rents.
"Deal numbers have steadily risen in recent months and investment appetite toward ‘the right opportunity’ never really subsided. The high value sales completed so far in 2022 illustrate this. These ‘big ticket’ transactions have ensured that investment volumes at the half way point reached the highest total for four years.”
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