Demand for business premises in the West Midlands showed further increases during the first quarter of 2005, according to the latest RICS commercial market survey.
Requirements for office accommodation continued to climb, up by 17 per cent on the final quarter of 2004.
Chartered surveyors also reported a slight drop in the inducements given to tenants to take offices, as available floorspace on the market falls once again.
Simon Quandrill, a partner at Knight Frank and regional commercial property spokesman for RICS West Midlands, said yesterday: "We are reaching the stage where available Grade A office space is almost non-existent in Birmingham city centre, which in turn means that footloose occupiers may look elsewhere if immediate Grade A space is required.
"Movement by businesses within the city will also be difficult in the near future, with potential relocations now at least 12 months down the line for larger occupiers.
"This marketplace may mean we see an increase in pre-lets on the new developments planned for the coming two to three years. Schemes such as Colmore Plaza, a 300,000 sq ft speculative development on the site of the former Post & Mail building.
"Rents are continuing to hold steady. It is anticipated that this new wave of developments will push rents upwards to a new level."
The West Midlands also saw a significant increase in demand for retail property during early 2005 and regional chartered surveyors reporting the only rise in available retail floorspace in the UK.
Looking across the UK, the survey showed demand for business premises rose for the sixth consecutive quarter despite a lacklustre national retail sector.
The steady increase in demand has led chartered surveyors working in commercial property to upgrade their expectations of rent rises to the highest in four years.
The continued growth in the office sector and strong distri bution activity is underpin ning demand in the industria property market. However, slowdown in UK consume spending has squeezed retail ers' margins, reflected by number of recent high profil retail failures.