Over the last five years, the flexible office sector in Manchester has continued to expand and has established itself as a key segment in the city’s office market. In 2019, we saw a lot of new and existing providers entering the market with the likes of WeWork and Bruntwood in particular both expanding their operations across the city. While we didn’t see any new openings in 2020, we have since seen Orega, Hana, Clockwise and Bold open new centres and we expect to see x+why launch at 100 Embankment later this year.
As a result of sustained demand for flexible office products, there continues to be strong appetite from operators wanting to establish a presence in the city. However, the big impact moving forward will be the number of landlords bringing their own offer to the market, which is reflective of a wider trend for this across the UK. Landlords are having to compete with this growing sector and are acting on this in several ways, either by establishing their own serviced office provision within their assets or by offering a half way house of fully fitted workspace let on flexible lease terms with all inclusive costs.
As a result of this expansion in Manchester, we anticipate that the percentage of total stock that flexible offices account for in the city will increase from a current level of approximately just over 5% over the next two years.
Similar to the wider office trend across the UK, demand for flexible office space in Manchester is predominantly driven by a flight to quality and occupiers seeking a greater variety of building amenities. The new centres that have opened recently have very much gone above and beyond in terms of the quality of space and diversity of amenities on offer. Inevitably, occupiers, particularly those who operate from both conventional and flexible space, will expect this level of quality across all models.
The high levels of quality on offer in Manchester’s flexible office market are reflected in the average desk rates, which are currently the highest outside of London sitting at around £400 with the higher end seeing £475 and the more competitive space at circa £300 per desk.
With more space entering the market, there could be potential for desk rates to return to more competitive levels. Whilst we do expect demand levels to remain strong from a range of occupiers including start-ups, SME’s and corporates, it will be vital that flex providers continue to offer first class facilities and amenities as well as an appealing packing for customers in order to compete.
