Office Space In Manchester
October 11th, 2007 | by Simon Rattray
Manchester, arguably now the UK’s second city, some would say greatest City, has experienced consistent economic growth over the last decade. This growth has been aided by costs being lower than in London, giving the city a competitive edge against the big smoke.
“It is a low-cost alternative to London,” says Jonathan Mills, from Jones Lang LaSalle, a commercial property agent. Manchester’s office market is in the ascendancy just as the city’s industrial sector is on a downward trajectory. With it being located 160 miles northwest of London, is attracting white-collar positions that are helping to counter-act job losses in manufacturing which has relocated to the lower cost regions of the far-east
So how much cheaper is it to locate your business in Manchester? Prime average annual office rents in Manchester are around £30 per sq foot, about one-third of the £70 rate for a prestigious West End of London location, according to Property & Portfolio Research Inc. However when compared to the rest of the EU this rate is not that attractive, where the average rental is £25 per square foot, based on a survey of 26 major markets by PPR’s . One reason why the UK tends to be more expensive for office space is that the GMT time zone allows companies to do business with USA and Asia all in one day.
Manchester, famed for Football, Music and alike, has of late gained some notable inward Corporate Investments. The BBC is going to relocate many of it’s departments to a business park in Salford Quays from White City in London. The city is also increasing the number of financial services jobs. The Bank of New York has a building at One Piccadilly that houses over 500 of its staff in around 80,000 sq feet of office space. This is expected to increase to over 750. This is major signal to business that an Investment Bank can invest so heavily in Manchester. With office rentals half of that in London it is easy to see why. There are four Universities in Manchester and so there is also no shortage of skilled workers.
However, the Manchester office space market along with the UK economy in general could be beginning to slow. With about 2.5 million residents, the Manchester region saw GDP grow by a yearly rate of about 2.9% in the last decade, well above the overall 2.2% rate of 15 major EU countries, PPR said. Manchester’s economic growth is expected to slow to a yearly rate of 2.2%, though this rate is still above the EU average.
In synch with this economic growth, property developers are creating office properties to meet the increase in demand. And as supply of office space increases, rents are likely to rise with inflation, however modern and new offices can still charge a premium in an property market where smaller Victorian and Georgian-era buildings dominate the City, says Kevin White,from PPR. Owners of older buildings are likely to feel the pinch with regards to their rents. The spectacle of a slower property market isn’t putting off some developers from moving full steam ahead with planning new office space. The Beetham Organization in Liverpool is looking to build an office adjacent to its recently developed hotel and condominium tower, which was designed by Ian Simpson.
Property company Allied London, is continuing with it’s Spinningfields development, a multi-use development in central Manchester on 22 acres of property that used to be held as nondescript municipal offices. The developer has stated that this project is the largest single city-centre development in Europe.
Allied has created approximately 2 million sq feet of office space all of which is occupied, said Mike Ingall, Allied’s CEO. Despite an increase in competition from other property developers, Mr. Ingall has said he plans to increase development and remains confident large and complex office floors will assist his firm. “We’ve proven to the market that you can take Manchester to another level and there are other developers who want to share in that success,” says Mr. Ingall. “I’ll do absolutely fine.”
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