The delivery of new commercial space will undoubtedly centre around the existing cores of Spinningfields and Piccadilly, but rising office rents in these areas may well push some existing occupiers out into the city’s “future core”. This will raise challenges for the city in terms of the supply of refurbished and affordable workspace.

Savills report for CityCo in 2012 highlighted a significant gap in workspace provision at the £10-£20/ sq ft rent band and suggested that this would be a particular problem for the Manchester’s fast growing TMT sector. Given that this sector is forecast to see employment growth of more than 4% per annum over the next decade, this remains a major challenge for the city.

While there are a number of refurbishment projects in the pipeline, our analysis of the current level of availability and the historic levels of lettings at different rent bands points to a high level of undersupply of lower rented space.

For example, 80% of the lettings over the last decade have been at rents in the £10-£25/sq ft range, but currently only 60% of the available office space is in these rent bands.

We believe that this represents a refurbishment opportunity for existing landlords, and we expect to see a rise in such activity in edge of core areas such as the Northern Quarter and Piccadilly.

^{Source: Savills Research, Real Estate Forecasting}

Development hotspots for the next decade

■ Core: With much of this area currently protected from the conversion of office space to residential under the PDR regime, we expect to see a balanced pattern of development in the years ahead. Office development will be focused on high specification new builds, which will be competing for the pool of large indigenous businesses, as well as that of the northshoring market from London and the South East.

■ MediaCity & Salford Quays: With significant office and other uses planned for the later phases of MediaCity, we expect this area to continue to evolve as “the Canary Wharf of the North”. We expect that the business mix will broaden from its current media focus to a more diverse base of occupiers who are unwilling to pay the high rents in the core. An enhanced retail and leisure offer will be fundamental to the future success of this area, and we expect to see further mixed-use development around Dock 9 and Ontario Basin to join up with Exchange Quay.

■ Salford/Irwell corridor: At present the higher residential values that are achievable in this area will encourage residential development over commercial. However, the delivery of major projects such as Middlewood Locks will dramatically enhance the attractiveness of the area for all types of uses, and we expect that office development will become more prevalent in future years, particularly around Salford Central station.

■ Southern Gateway: The improvement to the cultural offer and place at First Street will lead to further office and retail development in this area. We expect that this will become a popular location for large cost-conscious office occupiers who wish to be close to the core.

■ South Manchester: After a long period of decline, we expect to see a rise in occupier interest in the affordable South Manchester business park market. While the comparatively low capital values are unlikely to stimulate much development, the opportunities for the refurbishment of existing space to cater to both in and out-migrators are significant in this submarket.

■ Oxford Road: Sitting between the business and educational cores of the city we expect this area to be one of the most sought after for developers over the next few years. The combination of a number of strategic sites, the high footfall from the universities, and strong heritage will lend itself to the delivery of a variety of mixed-use projects, with a heavy focus on placemaking.

■ Piccadilly: This area has a number of large strategic sites that we expect to evolve into the future extension of the City’s current core. Residential development is likely to lead the regeneration of this area, with larger scale commercial development following once HS2’s arrival becomes more imminent.

■ Ancoats: Proximity to the core plus the availability of land and convertible commercial buildings are key to the ongoing regeneration of New Islington and Ancoats. The £1bn joint venture between the city council and Abu Dhabi United Group to build up to 6,000 new homes is supporting the transformation of the area and will deliver homes for rent.

■ Northern Quarter: Already established as the Shoreditch of Manchester, we expect to see a steady stream of good quality office refurbishments being delivered in this area. We also expect to see rising demand from serviced office and co-working companies for space in the area, catering to the rapidly growing media and technology sector.

^{Source: HM Land Registry}

^{↑ The iconic NV Buildings on the waterfront at Salford Quays}