How is Manchester fairing in the UK wide demand for office space?
The UK economy has recently begun to show decent signs of recovery. The ONS reported that in 2013 the UK GDP (Gross Domestic Product) grew by 1.8% compared to 2012. With employment figures improving and people spending more, businesses are starting to pick up.
Indications from a recent CBRE Research paper show that Manchester has seen a very healthy take-up for office space requirements in early 2014 and that this trend doesn’t seem to be slowing down.
The paper indicates the top 4 business sectors demanding office space in Manchester are the Professional Services with 35%, Banking & Finance at 19%, Consumer Services & Leisure holding 15% and Technology, Media & Telecoms with 11% of early take-up.
With some very notable larger lettings taking place (Slater Gordon – 104,312 sq ft; Barclays – 81,603 sq ft; and Trader Publishing – 60,968 sq ft), Manchester has seen a superb first half of the year. This trend looks to be continuing as the development of One St Peter’s Square, which is nearing completion for early of 2015, will increase the potential office space by a further 207,000 sq ft. If you include this to a few more builds taking place around Manchester, it’s clear to see that office space is becoming a premium and it’s attracting some major investments.
A lot of growth appears to have come from the Technology, Media and Telecoms (TMT) sector thanks to the recent development of Media City at Salford Quays, but the majority of future job growth is still considered to be with the professional services. It looks highly likely that the development of Media City has reinvigorated the TMT sector, especially the sub-sector of gaming, as Manchester continues to attract new technology start-up businesses. This in turn appears to be enticing much larger companies to look towards Manchester for viable office locations.
Since recent changes in the Legal Services Act came into force, CBRE Research has noticed that legal firms are seeking to reduce their overheads significantly. One of the methods they are using to achieve this is by cutting down on occupancy costs. As a result, there is a growing trend for law firms to relocate junior-level work away from expensive Central London offices to more cost effective regional cities like Manchester and Leeds. Likewise, other professional service companies seem to be following suit – KPMG being a prime example, who have taken advantage of recent market conditions to secure good quality office space in both these cities.
Over the next 5 years the growth projections for occupier demand of office space shows Manchester and the Thames Valley as being the strongest areas with Leeds, Birmingham and Oxford showing a lot of promise.
At Spatial Office Environments, we have witnessed this new found confidence first hand. Along with the influx of new businesses in the Manchester area, our own experience is showing that long established businesses are now expressing a revived desire to improve their own surroundings.
We have found a substantial increase in the number of city centre office lettings across the UK who are turning to interior design and office fit out specialists like ourselves to help them stand out from the evolving crowd. We have seen an increase in businesses sharing our firm belief that beautifully designed and well-crafted workspaces breed a better working environment and subsequently improve employee satisfaction and retention.
This is great news for the UK economy. Long may it continue.