Take-up

Manchester city centre take-up reached 462,000 sq ft in H1 2022, which was 2% above the H1 2021 total. Take-up was spread across 124 completed transactions, the joint highest total of completed H1 lettings in the last 16 years. The demand for fully fitted offices remains popular, with 20% of transactions in H1 being for plug-and-play space.

Grade A take-up totalled 140,000 sq ft in H1 2022, which equated to 30% of total take-up. This represented a significant improvement on H1 2021, where Grade A take-up accounted for just 16% of the market total.

Supply

Total supply decreased by 6% in the first two quarters of 2022 to 3.3 million sq ft. Furthermore, Grade A availability fell by 9% during the same period to 900,000 sq ft at the end of Q2. This decrease is indicative of the continuation of the flight to quality in the market as demand remains resilient for best-in-class space.

As a result of these changes, the total vacancy rate for the market fell by 100 basis points in H1 to 13.2%. Similarly, the Grade A vacancy rate decreased by 30 basis points to 3.6% at quarter end.

Take-up by business sector

The Public Services, Education & Health sector recorded a strong Q2 performance making it the most active sector at the end of H1, accounting for 31% of overall take-up. This included the 130,000 sq ft acquisition by the UK Government to relocate the Government Property Agency (GPA) to a new Grade A space at First Street.

Elsewhere, the TMT sector continues to be active in the market, recording 21% of H1 take-up, which made it the second most active sector in Manchester city centre in the first six months of 2022.

Rents

There was no change in the prime rent in H1 2022, which currently stands at £38.50 per sq ft. That said, there is still optimism for growth over the remaining two quarters of the year in a market that has seen 13.2% growth since 2016. With a number of prime Grade A requirements currently considering their options, Savills remains confident that the prime rent will break the £40 per square foot level in 2022.

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