Birmingham office update 8th January 2016

The Birmingham office market has reported a record-breaking 2015, with year-end total take-up reaching 970,000 sq ft, beating the previous high-water mark set in 2008.

News of the record breaking year follows the release of Q4 figures by the Birmingham Office Market Forum (BOMF), which show take-up of 212,449 sq ft across 30 deals.

The new high of 970,458 sq ft - achieved in 132 deals - was 260,000 sq ft more than the positive figures posted in 2014 and beats the previous record of 960,000 sq ft set in 2008.

According to Charles Toogood, senior director at Bilfinger GVA and chairman of BOMF, the stellar figures are underpinned by strong indigenous demand, as well as inward investment.

“Total take up in the Birmingham office market reached 970,000 sq ft in 2015 - a new record for the city and 300,000 sq ft above both the five and 10 year averages.

“A significant 30% of transactional activity was attributed to inward investment – the highest level ever recorded - with the most notable being HSBC, Advanced Computer Software and Extra Energy.  Similar levels of activity are anticipated this year. Birmingham’s renaissance is well underway.”

Ben Thacker, head of office agency at GBR Phoenix Beard, believes 2015 was a transformational year for central Birmingham offices as a consequence of an improved economy, an unprecedented number of major infrastructure projects and a shift in the external perception of the city. 

“Sentiment is positive, existing businesses continue to grow their operations but most significantly of all we are seeing major inward investment activity which ultimately is what will lead to the longer term expansion of the city and we expect this trend to continue,” he said.

The figures were fuelled by HSBC’s decision to relocate the headquarters of its UK personal and business bank from London to the city.

Other significant deals during the period were the 46,000 sq ft taken by BCU at Eastside Locks, the 34,397 sq ft taken by Extra Energy at 54 Hagley Road and the 45,000 sq ft taken by software firm ACS at The Mailbox.

The outlook for 2016 is promising, with strong rental growth forecast and nearly 1m sq ft of office space under construction in Midlands city.

However, according to Thacker the challenge going into 2016 will be an interim pinch point in existing supply.

“With no new build development likely to complete until the middle of 2018 at the earliest and with little more than a year of grade A stock remaining, it will be the delivery of high quality re-development / refurbishment schemes toward the end of the year that will satisfy immediate occupier demand.  

“Against this background it is inevitable that we will see tangible growth in headline rental levels and significant pre-letting activity taking place over the next 12 months," he concluded.