The developers behind one of the few BREEAM ‘Excellent’ office buildings in Birmingham believes a lack of similar developments will pay dividends for their scheme.
Folkes Holdings and Trigram Properties, which is bringing forward the 44,500 sq ft Langley Point, claim the funding freeze is putting speculative development on hold and potentially causing a shortage of BREEAM ‘Excellent’ properties when the occupier market returns.
The shortage will most affect public sector departments, higher profile institutions and PLCs seeking new space, as these occupiers are increasingly pressured to take the lead on environmental issues prompting a natural preference for BREEAM ‘Excellent’ buildings, explained Carl Griffin, managing director of Folkes Holdings.
“Currently, there is just 367,500 sq ft of new build BREEAM ‘Excellent’ office space on the market in Birmingham. In normal market conditions, this represents less than a year’s take-up,” he said. “This limited supply suggests such buildings will become increasingly sought after by prospective occupiers and therefore should be able to command higher rental levels when the market restarts.
“Whilst at the moment enquiries from occupiers are still being received, clearly the pace has slowed considerably in the current economic climate and it is still very much a tenants market.
“As to be expected, the amount of space taken in the first six months of 2009 is significantly down on last year.”
However, whilst Birmingham has 1.28m sq ft of Grade A office space currently available, presently there are just four new BREEAM ‘Excellent’ buildings being completed in the city.
“This will eventually lead to dearth of environmentally up-to-date office units of the type that are attractive to occupiers such as The Highways Agency who would only consider BREEAM ‘Excellent’ buildings,” said Mr Griffin.
He says companies anticipating a move over the next three to four years should act now or risk missing out.
He said: “When the market restarts, BREEAM ‘Excellent’ buildings will lead the pack on higher rental levels justified not only by the quality of the buildings, but by reduced operating costs.
“Now is the time for a good deal because when this limited office space is gone, it is unlikely comparable offerings will be found for a significant period.”
This is at a time when a latest survey by commercial property agents Drivers Jonas shows the current main driver for occupier decisions is cost.
Analysis shows that Langley Point as a BREEAM ‘Excellent’ building represents outstandingly good value against other city centre properties of similar specification, with potential savings up to £500,000 per annum on total running costs.
Much of this has to do with lower service charge, lower rating costs and lower rating costs in comparison with others.
An exemplar of energy efficiency and green design, Langley Point was constructed at 20 per cent extra cost, with the specific intent of keeping running costs for the occupier to a minimum.