Rise of Manchester’s TMT sector sparks arms race for trendy office space

Tipping Point 

In the first quarter of this year we reached a significant tipping point.  For the first time the TMT sector was the most active within the Manchester city centre office market with 39% of the total take-up. Professional Services, historically the dominant sector in the market trailed with 24%.

Wind back just four years and the stats had Professional Services at 29% with TMT way down at 14% - which shows the pace of change.

The rise of creative & digital sectors      

Government policy to encourage and nurture the creative and digital sector around existing clusters like Shoreditch and Silicon Roundabout has perhaps been too successful!

 In recent years London has seen a boom in demand from the serviced office sector, with annual take up exceeding 15% of the total market looking to capture these new start up Tech occupiers. Many now find it too expensive to rent or find suitable space and are increasingly looking for alternatives.

Knight Frank figures show average rents in Shoreditch have increased from £40 per sq. ft. in 2011 to £65 in 2015 - to put that into perspective, average rents in London’s square mile are £66.50 per sq ft.

And a recent report by Sussex Innovation at the University of Sussex – which is itself opening its own tech hub – says around three quarters of technology startup owners in London are considering leaving the capital over the next five years with respondents cited rising property prices (79%), difficulties accessing funding and investment (27%) and securing top talent (24 %) as the reasons.

Manchester is capitalising on this flight. 

The arrival of the BBC five years ago to MediaCityUk in Salford has underpinned a new TMT cluster backed also by the Sharp Project and the Space Project in East Manchester with close ties with the city region’s four universities to supply the graduate talent.

The rise in TMT demand within Manchester has led to both traditional serviced office providers and the new breed of co-working operators focus their attention further north to satisfy their expansion plans and to meet this growing regional demand.

WeWork, the world’s most renowned co-working operator, is in the process of acquiring circa 45,000 sq ft - the first of three planned centres in Manchester and their first venture outside London in the UK.

Others have been even swifter off the mark. iHub has expanded for the second time taking its total occupation in Manchester to in excess of 20,000 sq ft in less than two years. Headspace, which opened a 15,000 sq ft co-working space in late 2016, is already close to capacity.

A number of other operators, traditionally associated with Shoreditch - London’s Tech cluster, are also actively seeking opportunities in Manchester.

Traditional developers and landlords are increasingly refurbishing existing office accommodation to attract these experience-loving occupiers.

Suspended ceilings are being pulled down, plaster ripped off the walls, M&E exposed, they are installing bars and slides and communal meeting spaces but more importantly responding quickly to provide informal, creative spaces that offer great connectivity.

Not surprisingly a number of new office buildings coming to market in locations traditionally associated with more corporate occupiers are aimed directly at the TMT sector, such as XYZ, Allied London’s offer in the heart of corporate Spinningfields which has, perhaps not unsurprisingly attracted not just tenants like Global Radio and NCC but lawyers Shoosmiths. 

Demand from the TMT occupiers will continue, a number of rapid growth companies including the likes of Rental Cars/Travel Jigsaw, BooHoo.com, Bet365 and Money Supermarket are all present and have expanded their occupation recently and we expect this trend from similar occupants will continue.

Knight Frank's Manchester office helps occupiers, developers and landlords secure office space in Manchester's most in demand locations. See how we can help you capitalise on the city's growing TMT sector.