North West Office Market Heats Up

Posted by Glenigan on 20th February 2024 -

Prospects for the office sector in the North West are improving and set to generate a swathe of opportunities for the construction industry.

Although the value of new office projects starting on site in the region during the three months to January 2024 weakened, the value of office project developments securing planning permission leapt by 68% to £298 million.

Glenigan economics director Allan Wilen commented: “The office market in the North West is proving resilient as a combination of limited supply and a post-pandemic return to work is driving demand.”

The region’s flagship commercial development is the £400 million St Michael’s office scheme at Jackson Row in Manchester, which is being developed by joint clients KKR and Relentless (Project ID: 15296900).

Construction began in February on the £250 million second phase of St Michaels, which will provide nearly 7,000 sq m of office space, a 162-bed five-star hotel, and apartments (Project ID: 21567047). Work across the overall development will run until 2028, generating a host of opportunities.

Strong office supply

The region’s biggest city is producing other major office and commercial schemes including the £450 million Manchester Life Sciences & Student Accommodation Quarter (Project ID: 23083776).

The masterplan has been produced by a consortium including McLaren Property, Moda Living, Property Alliance Group and Kadans Science Partner and features offices, life sciences space and student accommodation.

Work on a £70 million office scheme within this development is due to start in May according to Glenigan’s construction industry research. Wates has been named as preferred bidder and a main contract award is imminent (Project ID: 23396894).

Elsewhere, tenders have also been returned for the £175 million Electric Park office scheme in the New Islington district of Manchester and construction should begin in June (Project ID: 20399565). Outside of Manchester, work on the £200 million Mall Pall Exchange in Liverpool could also start this summer with plans for 161,874 sq m of office space (Project ID: 16348092).

Positive indicators

Other major office-led schemes are also due to enter the pipeline including the £207 million Central Retail Park Redevelopment at Great Ancoats Street in Manchester (Project ID: 13021292). Manchester City Council and the Government Property Agency are driving the proposals and a planning application should be submitted this summer.

The positive indicators for the North West office sector showing up in Glenigan’s construction industry research are reflected in the latest Crane Hire survey for the region from Deloitte.

The survey found 61 projects on site in Manchester and Salford and that 38% of the 1.5m sq ft of office floorspace to be delivered in 2024 is pre-let. Deloitte cites a strong pipeline for 2024, which is driven by “a notable increase in the number of highly sustainable, well-designed and amenity-rich new build Grade A offices.”

There was another 616,680 sq ft of office space in the pipeline and due for completion in 2025 according to Deloitte. This should include Henry Boot Development’s £140 million Colloco office scheme at St John’s in Manchester, where Glenigan’s industry research shows construction will begin this August (Project ID: 20319725)

Buoyant future

With a strong pipeline of projects entering the planning system and securing approval, the North West office sector is set to keep the industry busy over the next couple of years.

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