Manchester’s office market has seen more take-up from tech, media and telecoms companies in the last 17 years than any other regional city. This looks set to continue, with future growth areas including advanced materials, cyber security and digital post-production, as Manchester solidifies its role as the biggest tech hub outside London.
The city's tech infrastructure is broad based with strong higher education, above-average graduate retention and a good mix of accelerators and funding organisations. This will be further enhanced by the opening of Mi-IDEA and the Sir Henry Royce Institute for Advanced Materials in 2019.
Manchester has long been at the forefront of new media in the UK and the Tech Nation 2017 report estimated that it supports 62,650 digital jobs, creating an annual output of £2.8 billion. The challenge is providing suitable office space for companies in the growth areas outlined above. While we expect the big brands to be well catered for, more flexible and affordable space is needed.
This will play a role in supporting the proliferation of serviced offices. The sector is booming in London with operators taking almost 850,000 sq ft in H1 2017. As one of the UK's most diverse regional economies, Manchester is an obvious second step for operators reaching saturation in the capital. The recent WeWork acquisitions at No.1 Spinningfields and One St Peter's Square show this trend is already coming to life.
While the differential between market and serviced office rents is less wide in Manchester than London, the city’s large supply of secondhand office space presents an interesting opportunity for operators well capitalised enough to buy their own buildings. This removes variability from their base cost and enables them to better flex pricing to fit future demand. That said, the majority of serviced operator demand in Manchester will still be on a leasehold basis, with a wider variety of offers likely to emerge, catering to both start-ups and established business in existing and emerging locations.
Finally, Manchester remains one of the few UK cities offering a credible ‘north shoring’ story around wage and property cost savings combined with a large, diverse labour force. Those arriving from London and elsewhere will continue to be drawn to the best buildings in established locations, keeping voids low, driving rents upwards and maintaining a tight city core.
However, this rental growth will present a challenge for local businesses looking to upgrade their office space, pushing tenants out to the northern, southern and western fringes of Manchester. The rising popularity of refurbished space will mean a lot of property that hitherto might have been targeted for change of use will stay as offices. In turn, this will support a resurgent retail and leisure offer and lead to locations previously viewed as 'fringe' becoming 'future core'. The Oxford Road, Irwell Corridor and Ancoats areas are all ones to watch.
Read more: Manchester Office Spotlight