A sharp increase in Grade A office occupation has seen availability of top space in Birmingham fall for the first time in three years according to new research.
The latest net stock absorption research from Colliers International found that Birmingham’s core office market is showing signs of recovery which in turn is eroding the city’s vacant Grade A stock.
The research found that healthy levels of absorption – the difference between the amount of space let to occupiers and the new office stock coming to the market – is expected to continue up to 2013.
Half year availability fell for the first time since the second half of 2007, down by more than three per cent compared to December 2009. Grade A availability within the core city submarkets also fell by 15 per cent half year on half year.
Absorption rates are set to accelerate and will be further fuelled by the completion of the Birmingham Development Company’s Cube scheme, which signals the end of current speculative development within Birmingham city centre.
David Smeeton, head of Colliers International in Birmingham, said: “There is no doubt that across the range of market data, the news is far more positive than at any time since we began analysing the Birmingham market.
“Strong absorption is being fuelled by the twin drivers of improving demand for office accommodation, coupled with the shortage of new space coming onto the market,” Mr Smeeton said.
“Completed schemes such as Eleven Brindleyplace and 45 Church Street are starting to see significant rises in occupancy levels.
“The former is close to seeing the majority of floors let, which includes our own expansion to take the whole of the top floor; and accountancy firm Mazars is set to move its operations to new 10,000 sq ft offices at 45 Church Street.
“Other requirements such as Pinsent Masons (65,000 sq ft) and TD Waterhouse (25,000 sq ft) are at an advanced stage with shortlists of key city centre schemes being finalised. However, given anticipated space shortages and rising occupational costs, regears and lease renewals will become more commonplace,” he added.
The research also confirmed that vacancy rates appear to have peaked, with the current overall figure for Birmingham as a whole down to 19.3 per cent from a high of 19.9 per cent in December 2009.
Within the city core, rates have fallen more sharply down from 20.2 per cent to 18.8 per cent. Grade A vacancy is also falling.
In the context of the wider regional market, Birmingham is also holding its own in comparison to Manchester and Leeds.
While a similar positive trend in net stock absorption rates is emerging in Manchester, by contrast Leeds has seen a marked decline with all grades of space experiencing negative absorption.