Birmingham offices will see rents rise by five per cent to a seven-year high of £31 per sq ft in 2015, experts in the region have forecasted.
UK regional office markets have seen subdued rental growth over the last few years but the broadening economic recovery is feeding through to improved occupier demand according to new research by Knight Frank.
This together with the diminishing availability of Grade A stock and lack of significant speculative development completions over the last few years is driving rental growth across the regions, it claims.
This positive growth in the city is also predicted to to be replicated in Manchester, Newcastle and Aberdeen.
Strong rental growth is expected in the majority of regional city centres over the next 12 months, with new development completions securing higher prime rental levels.
Given the diminishing availability of Grade A stock and lack of developments, vacancy rates are likely to fall or at least remain stable, with the exception of Aberdeen where the level of speculative development is higher.
Knight Frank experts are also anticipating a slight softening of incentives over the next 12 months.
Ashley Hudson, head of Knight Frank Birmingham, said the lack of supply would continue to push up demand.
He said: "There is a continued lack of supply of brand new grade A space in Birmingham’s core and this is resulting in a tightening of the market at all levels and pressure on existing rental levels. A couple of Schemes such as 103 Colmore Row, which Knight Frank has just acquired for Sterling PV and Rockspring, will commence on site next year and we anticipate strong pre-let interest from existing major Birmingham occupiers and inward investors.
"The quality of this 220,000 sq ft development and its unrivalled prime location will drive rental growth in the City at the very highest level and this will filter down through the second hand market also."
Louisa Rickard, associate, commercial research, Knight Frank, added: "As economic growth spreads to the regions we expect to see prime office rents rise across regional city centres in 2015.
"Lack of supply at the prime end of the market will add further upward pressure on both prime and secondary rental growth."