Birmingham city centre office take-up expected to exceed 2012 levels

BIRMINGHAM city centre office market take-up levels are set to exceed 2012, according to new research by property consultancy BNP Paribas Real Estate.

Joanne Warren, associate director within BNP Paribas Real Estate’s research department, said: “H1 2013 Birmingham city centre take-up reached 336,937 sq ft, which was more than double the 147,654 sq ft achieved in H1 2012.

“Whilst this makes for good headlines, it is somewhat misleading as the take-up level was boosted by a single deal: Deutsche Bank’s 134,000 sq ft letting of Hines and Moorfield’s newly refurbished Grade A building 5 Brindleyplace.

“Ultimately, it is the smaller deals sustaining the market, with 56 of the 59 deals completed in H1 2013 falling below 10,000 sq ft.”

But the firm expects investment levels to be lower than last year.

Andrew Meikle, head of Birmingham investment, said: “In the investment market, the 2013 transactional volume will be down on last year’s level.

“This reflects the on-going under supply of high quality office stock for investors to buy. Fierce competition for quality assets will result in further yield compression.

“Later this year/early 2014, we expect to see an increase of investment stock to the market as vendors look to sell assets at more attractive exit price points.”

Total office investment reached only £32m in H1 2013, down 74% on H2 2012 when £121.7m transacted.

As occupational markets have started to recover in Birmingham there has been a growing appetite from overseas investors from Europe, the Middle East and even the Far East.

The competition for quality assets has resulted in a discernible shift in yields, which have moved in between 25 and 50 basis points since the start of the year.