Birmingham office news 13th February 2015

Prime office rents in Birmingham increased by £1.50 per sq ft in the second half of 2014, as the take-up figure reached 500,000 sq ft for the same period, reports CBRE.

However, despite the lift in take-up figures available Grade A office stock fell by just 205,000 sq ft. According to CBRE’s latest Birmingham Office MarketView there was 2.15m sq ft of stock (including existing stock and confirmed, under construction pipeline) available to let or pre-let between July-end December last year, compared with 2.36m sq ft for the first half of 2014.

The new office buildings planned for Paradise alone account for circa 340,000 sq ft between them. With much of the new stock entering the pipeline not due for completion until 2017/18 this still leaves companies looking for large floorplates in the short-term with limited options.

Ashley Hancox, senior director in CBRE’s national offices team, said: “This is the first time in a long time that we have seen a significant amount of new stock added to supply. Whilst this is welcome, we can’t get too carried away, as the buildings at Paradise won’t be delivered before 2018, so companies looking to move in the very short term will still be short on choice.” CBRE says with an average yearly take up of 640,000 sq ft, on the face of it there is currently only three years’ supply, while companies with requirements of 40,000 sq ft plus will find only a handful of options in the city at the moment.

Hancox adds: “Take up last year was in excess of 700,000 sq ft and as we move into a more confident business environment the average annual take up statistics start to look a bit conservative. I fully anticipate that demand will continue to pick up as we move further out of recession – there are already a significant number of existing enquiries for new space; the challenge now is accommodating these in their target timescale.

Hancox believes the rising demand coupled with improving rents will entice developers to hit the button on speculative developments. “Some need a pre-let to release development funding, but I hope that now funders can see the market improving that they will start to consider speculative building. “In considering the delivery options we shouldn’t forget the good quality redevelopments. We are pleased to see that a number have already committed including Brockton’s 50,000 sq ft at Mailbox, IM’s 140,000 sq ft at 55 Colmore Row and Bruntwood’s 110,000 sq ft at 2 Cornwall Street. All of these will deliver space in the next 6-18 months,” he adds