Property specialist DTZ has warned of a shortage of top quality office space as the economic recovery takes hold in the regions.
The firm’s 2014 Annual Outlook report, released in Birmingham, says demand for commercial property is strengthening with take-up growing across the regions. However, availability, particularly for Grade A office and industrial space, is falling rapidly.
The growing shortage of grade A office space, combined with the regional development pipeline at an all-time low, means investors are now encouraged to acquire assets for development and refurbishment.
The report said Birmingham was among a group of cities best-placed to respond to potential new demand.
David Tonks, senior director and head of DTZ’s office agency team in Birmingham, said: “As the supply and demand balance continues to shift we will see the cost of good quality space increase during 2014 and it is already evident that incentives offered to occupiers are less generous than they were 12 months ago and pressure on headline rents is growing.
“There are, however, also signs of landlords competing for occupiers by providing improved services to their tenants. The trend for an improved level of service is most evident in the market for secondary accommodation that accounts for almost 50 per cent of annual take-up within the central Birmingham market. The more successful buildings are increasingly offering additional services that provide increased convenience for occupiers.”
DTZ Research also revealed that the outlook for the industrial market is positive with increased manufacturing activity and export orders.