London is not the only commercial property market to be feeling the sap rising this spring. Manchester is buzzing with increases in both occupier and investor activity.
Office market take up figures for the first quarter were 61% up on the same period in 2012, at 274,800 sq ft, with 64 deals done compared to 61 previously.
Key city centre office deals included Traveljigsaw who took 63,000 sq ft of space at Sunlight House on Quay Street and the 22,000 sq ft letting to World Pay at 3 Hardman Square, Spinningfields. According to the Manchester Office Agents Forum (MOAF), at the end of the first quarter city centre take-up is currently in line to exceed the 10-year average of 900,000 sq ft for the full year.
In one of the largest single lot office investments the City has seen, developer confidence in the office market was boosted by the £142 million sale of the Co-op’s One Angel Square to Chinese government-backed investors in Q1.
Last month Hines, the international real estate firm, signed a joint venture agreement with Manchester & Metropolitan Properties to develop Landmark, a 178,000 sq ft office building located by St. Peters Square. The project will be funded by Hines, who will manage project development on behalf of the venture.
Anthony Leonard, director at Hines, said, "We have been looking at opportunities in Manchester for some time and are delighted to have finally secured such a prime city center site. Availability of quality office space will become scarce and, with few new buildings under construction, we believe there is a tremendous opportunity in Manchester to deliver new Class A space. In bringing new stock to the market in 2015 and beyond, we hope to be in a prime position to capitalize on an improving economy."
Overseas money is poised to pour into the market in the second half of the year, with more than 20 serious investors doing the rounds of the Manchester agents.
Dan Crossley, investment specialist at WHR, said: “We’re in a completely different world now, compared to the end of last year.
“Property companies and overseas investors see Manchester as a place to invest.”
He added: “Today, we are seeing probably 10- times the activity we were seeing this time in 2012.”
Crossley says city centre offices and industrial property are particularly appealing to investors.
Testing the market first will be the sale of the Royal Exchange, between Cross Street and St Ann's Square, is being sold for only the second time since first being built in 1729. PRUPIM has appointed the Manchester office of GVA to handle the sale of the 280,000 sq ft building for around £46 million. The Royal Exchange Arcade and the theatre are not part of the sale.
Savills also has the 430,000 sq ft Exchange Quays office complex, at Salford on the market for around £32 million.
Matt Stretton, investment specialist in the Manchester office of Cushman & Wakefield said: “The market is frustrated by a lack of stock, which has resulted in competitive tension being created on opportunities which 12 months ago may have received limited interest.
“We are seeing continued demand for core and core plus opportunities from a number of UK Funds, although the German investors are now starting to look at the regions once again.