Office rents in Manchester are forecast to increase by 8% to £35 per sq ft by 2018.
According to the latest Net Stock Absorption report by Colliers International, prime rent for grade-A office space in the centre of the city will increase from the current rate of £32.50 per sq ft to £33.50 per sq ft by the end of 2015 and peak at £35.00 per sq ft in 2018.
The increase in rental levels is being driven by the ongoing shortage of grade-A office space in the city centre as demand from potential occupiers continues to outstrip supply.
Available grade-A space fell by 38% in 2014 with take-up reaching a record level as 1.4m sq ft of deals were transacted.
The high level of deals was driven primarily by a requirement for 20,000 sq ft-plus units, with 10 such deals in 2014 compared to three in 2013.
The overall lack of grade-A space persisted despite the provision of 176,000 sq ft at Argent’s St Peter’s Square scheme, where a headline rent of £32 per sq ft was reported to have been paid by law firm DLA Piper for 45,000 sq ft.
According to the research, the supply and demand imbalance will persist in 2015 and into 2016-2017 due to a lack of new grade-A space, resulting in further increases in headline rents.
Nick Nelson, associate director, national offices at the Manchester office of Colliers International, said: “Delivery of new space will be negligible during 2015, which will increase the downward pressure on grade-A vacancy.”
