Looking across the key commercial sectors of offices, retail, leisure and industrial, however, it’s clear that if this momentum is to be maintained, additional development is required. The positive is that there is sustained demand from investors and occupiers across most sectors.
Manchester has continued to perform not just on a national level, but also a global stage in its ability to attract investment from both domestic and international parties, leading to a strong sense of momentum, according to our latest research.
Offices as a lightning rod
Using offices as an example, take-up in 2024 was 1.2 million sq ft, significantly up on 2023 and this continued strongly into 2025: the first quarter of this year was at the highest level since 2018. Large deals have been completed on existing stock as well as pre-lets on projects that are close to completion, which is a sign of how popular the city is for businesses.
Addressing the relative lack of office supply requires development, which is slow. There are a number of reasons for that, not least the availability of capital and the cost of construction. The pipeline contains 1.23 million sq ft (with 82% of that being major refurbishments), but there are no projects on-site that are due to complete after this year.
It’s important to distinguish between cyclical and structural challenges for development, and we’re confident that the current viability challenges fall into the former category so should start to ease with time. Additionally, the lack of office supply pushes up the rents that can be achieved, which in turn makes new developments more viable. There is 10 million sq ft of projects in various stages of the planning process, so the appetite to develop is there in theory. When the first spades go in the ground will be the litmus test for the city.
A similar story for other sectors
Away from offices, the story is similar for retail, leisure and logistics, albeit with sector-specific nuances. The story across the board is one of strong demand from occupiers as the influx to Manchester continues apace. The city is seen as particularly viable for retailers which value its international reputation and dynamic population. The last two years saw more than 200,000 sq ft of retail and leisure space completed, with an equivalent amount due in the next three years.
There’s an interesting comparison with logistics too, where occupational demand remains strong but supply of the best assets is falling behind, primarily due to the difficulty in accessing funding and the complexities of the planning process. So, while supply has increased by 19% over the past year, 1.35 million sq ft of that has been low-quality second-hand space.
Finally, taking a look at the residential market it’s clear that it’s the dominant development force in the city centre, with build to rent still the priority. The pipeline is strong, with 11,000 homes in construction due for completion in the next four years. While the city is more affordable than London and other international cities, there is still a requirement for a broader spread of accommodation and affordability. That shift is underway, with more co-living schemes being delivered, and the introduction of The Manchester Living Rent providing more access to affordable products.
Manchester’s performance has been exemplary in recent years and the city continues to benefit from its popularity, but now is crunch time for the future. Each part of the property puzzle, from residential to industrial, is fundamental to the ecosystem that has made Manchester such an appealing city, so let’s see some spades in the ground.
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