A lack of speculative development and increasing activity in the market may leave businesses looking for large ‘statement’ offices in Birmingham disappointed according to new research.
Research by Cushman & Wakefield covering the third quarter of the year found that a lack of top quality space was being masked by a plentiful supply of mid-range accommodation.
Scott Rutherford, Cushman & Wakefield’s head of business space in Birmingham, said: “There is no disguising that overall supply levels remain high and so it is still a tenant friendly market.
“Grade A space is however declining at a quicker rate than total supply levels, and there is a shortage of large floorplates emerging, which will gradually diminish the choice for occupiers.”
He warned that at present, Birmingham has only six buildings that can accommodate tenants requiring in excess of 10,000 sq ft.
He added that with the completion of The Cube development, there was now no large Grade A property under construction, and none on the horizon, other than the partially pre-let Two Snow Hill scheme, which is currently seeking funding.
The research also revealed that the take-up of office space in the last quarter in Birmingham soared by a 258 per cent, due in no small part to the sale of Calthorpe House to The Binding Site. Calthorpe House is a new, Grade A office building in Edgbaston, of 107,044 sq ft.
The sale of this building was nearly half of the 262,050 sq ft of space that was taken-up during the third quarter, the highest figure recorded in a single quarter for more than two years.
Most of the 46 deals during the last quarter were for units below 10,000 sq ft, but Mr Rutherford said that The Binding Site deal provided a vivid reminder that there were still major occupiers who were active in the market.
As far as rents are concerned, the new research revealed that levels held firm across the region throughout the quarter, despite the gloomy economic backdrop.
Prime rents in Birmingham city centre went up slightly during the quarter, to £28 per sq ft, the first improvement since the end of 2008. Elsewhere, there was no change – for example, headline rents in Edgbaston remained unchanged at £13 per sq ft, a similar situation in the M42 corridor, unchanged at £19.90 per sq ft.
Overall, the outlook for the last quarter of this year is one of stability, where rents are concerned. Mr Rutherford said: “The current scarcity of Grade A large floor plate buildings has helped to support prime rents and further upward rental pressure may emerge if a number of requirements are resolved during the final quarter.”