Manchester Offices + Workspace Update - Lambert Smith Hampton

2. Source: LSH Research 2019 OFFICE MARKET 1.74m 53% 80% 48% transacted in 2018. A record breaking year! 2018 :huge Increase on the 10 year average. Of transactions were below 5,000 sq ft Deals over 20,000 sqft 1.4m £30.00+ 10% NQ Take-up forecast to be over 5 year average. Over a quarter of all space transacted in 2019. Increase in overall take-up from the creative/TMT sector Greatest Rental Growth

3. Source: LSH Research DEMAND 5 year average take up (2014– 2018) - 1.383 sq ft 10 year average take up (2008 – 2018) – 1.142 sq ft

4. Source: LSH Research MANCHESTER – A NORTHERN POWERHOUSE 0 500 1,000 1,500 2,000 Manchester CC Leeds South Manchester Liverpool Sheffield Salford Warrington Newcastle CC Forecast 2019 Take-up Vs 10-year Average (000 Sq Ft) 10-year average

5. SMALLER DEALS UNDERPIN THE MARKET Source: LSH Research Below 5,000 sq ft 5,001 - 10,000 sq ft 10,001 - 15,000 sq ft 15,001 - 20,000 Above 20,001 Space sized below 5,000 sq ft accounted for 80% of all transactions in 2018!

6. OCCUPIERS Source: LSH Research

7. SUPPLY ROBUST SUPPLY OF NEW AND REFURBISHED SPACE

9. REDUCING SUPPLY Source: LSH Research YEARS OF SUPPLY SHARE OF GRADE A SHARE OF GRADE B/C 0 1 2 3 4 Liverpool Leeds Newcastle CC Salford Sheffield Manchester CC Warrington South Manchester

10. MANCHESTER CITY CENTRE GRADE A EXISTING AND NEW BUILD OFFICE DEVELOPMENT PIPELINE

11. CURRENT THEMES Source: LSH Research 1. Headline Rents will continue to grow. Headline Rents will reach £40:00 sqft 2. The growth of the office market will create hot spots. Northern Quarter will out perform 3. A growing trend of office use for residential schemes. Trend or isolated incidents?

12. RESIDENTIAL TO OFFICES – ISOLATED INSTANCES OR TREND? Source: LSH Research  Build cost comparisons  Rental Plateau

14. NORTHERN QUARTER Source: LSH Research

15. Source: LSH Research  The steady supply of Grade A refurbishment, and a rise in quality, will see rents in the this sector continue to close on new Build rents.  The continued rise of diversification in occupier trends – fuelled in part by the rise of co-working operators.  Co-working companies will continue to take advantage of the depth of demand in Manchester. At least 150,000 sq ft of operations are currently not satisfied. The serviced office sector accounted for 3% of the total build stock at the end of 2018, this will rise to 5% in 2019 and stand at 8% by the end of 2020. SERVICED OFFICES

16. © Lambert Smith Hampton© Lambert Smith Hampton Buildings are increasingly Occupier aware Wellbeing, Work styles & Socially conscious

17. Source: LSH Research SUMMARY Serviced sector will continue to dominate headlines as workplace styles evolve. Prime Rents will hit £40:00 sqft in the next 12 months. Office development will achieve value parity with residential schemes. Manchester will continue to attract large dynamic occupiers.

Notes de l'éditeur

So as you can see the city centre office market has consistently performed well over recent years – with over 1m sq ft transacting each year since 2014. Which we are forecasting will happen again this year!
So as you can see the city centre office market has consistently performed well over recent years – with over 1m sq ft transacting each year since 2014. Which we are forecasting will happen again this year!
So what makes up such level of take-up… Small scales requirements – so space below 5,000 sq ft accounted for 80% of all transactions and is a trend that is consistent with previous year. Deals of this size is what we like to call the engine room of the market. We had some large pre-let deals occur last year including Booking.com agreeing to take 225,000 sq ft across the way at the new St Johns development as well as HMRC taking a full building of 157,000 sq ft across the river in Salford at 3 New Bailey. Refurbishments - including Amazon taking 90,000 sq ft in NOMA (not far from Victoria Station). Looking ahead we also have a healthy pipeline of high quality space be it New Build or Refurbs. Important to note a lot of it will be taking out of the market as a pre-let due to the high demand. For example there are two Grade A new builds due to complete this year and one of them (125 Deansgate) – which is the muddy red building opposite Spinningfieds) has already been pre-let in its entirety by Regus (serviced offices).
So what makes up such level of take-up… Small scales requirements – so space below 5,000 sq ft accounted for 80% of all transactions and is a trend that is consistent with previous year. Deals of this size is what we like to call the engine room of the market. We had some large pre-let deals occur last year including Booking.com agreeing to take 225,000 sq ft across the way at the new St Johns development as well as HMRC taking a full building of 157,000 sq ft across the river in Salford at 3 New Bailey. Refurbishments - including Amazon taking 90,000 sq ft in NOMA (not far from Victoria Station). Looking ahead we also have a healthy pipeline of high quality space be it New Build or Refurbs. Important to note a lot of it will be taking out of the market as a pre-let due to the high demand. For example there are two Grade A new builds due to complete this year and one of them (125 Deansgate) – which is the muddy red building opposite Spinningfieds) has already been pre-let in its entirety by Regus (serviced offices).

Manchester Offices + Workspace Update - Lambert Smith Hampton

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