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A JLL report shows that city deals accounted for 26% of the 142 completed nationally last year, in the face of volatility in the government’s mini-budget, rising cost of living and debt.

The average vacancy rate in Manchester, Bristol, Birmingham, Edinburgh, Leeds and Glasgow fell from 6.2% in 2021 to 5.5% in 2022, with the number of leases increasing by 19% to 2.4 million feet squares.

Although these figures show an overall increase in activity in all six cities, the numbers are below the ten-year averages.

Meanwhile, domestic investment activity shows a 17% decline on the 10-year average and a 9% decline from 2021, totaling £1.6bn.

Elaine Rossall, UK office head of research at JLL, said: “It is encouraging to see an overall pick up in activity in our six markets, but trending below the five and 10-year averages suggests confidence is not it has recovered to the extent that I still would have liked.

“What is needed now is economic stability and a clear growth plan for the regions, which in turn will encourage investors to spend longer term in our cities.”

Investment

Manchester’s office investment market was the most active of the Big Six, recording £421m of sales volumes in 2022 compared to Leeds’ £174m.

However, these figures represent a 40% decrease from £707m in 2021.

La Francaise Real Estate’s purchase of Barbirolli Square for £47.5m was the biggest deal in the last quarter of last year, according to JLL.

Otherwise, JLL notes that most of the city’s activity was ‘value-added’ space, whereby assets are relocated to provide suitable workspace.

Lease

A total of 1.2 million square feet of office space will be transacted in Manchester in 2022, compared to 618,000 square feet in Leeds.

JLL’s figures are in line with the January Manchester Office Agents Forum report, which also noted that the 1.2 million square feet of deals in 2022 were 15% higher than in 2021.

The largest transaction last year was GPA’s 130,000-square-foot lease on First Street, according to JLL.

Supply fell at the end of 2022, with total office vacancies falling from 6.9% in the first quarter to 5.4%.

On the positive side, JLL reported a total of 890,000 square feet of workspace under construction at the end of the year, with 545,000 square feet to be completed this year.

Of the total 890,000 square feet under construction, 640,000 square feet are new construction.

Manchester’s median rental price increased over the year by around 4%, reaching £40 per square foot. This increase reflects the demand for higher quality offices in the city.

Stephen Hogg, JLL North West Director, said: “As occupants continue to prioritize Grade A credentials, we expect to see a build up of pressure in an already well-populated market for prime office space, which will further increase rents.”

Find the full report at jll.co.uk.

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