Supply shortage could see rents hike

SAVILLS is predicting a lack of supply in the Birmingham office market could result in an increase in rents.

In its latest UK office market report, the property consultancy suggests a dropping vacancy rate and the lack of a meaningful development pipeline will mean quality space is at a premium.

Nick Williams, office agency director at Savills Birmingham, said: “The supply story is an encouraging one in the Birmingham office market as the vacancy rate continues to fall and now stands at 15.7%, its lowest level since Q2 2009.

“Whilst the recovery is not going to be a quick one, the continued lack of development will continue to cause a supply shortage which will help offset the weaker occupational demand and drive prime rental growth.”

Clare Bailey, associate director of Savills research, added: “We predict that as early as 2013 we will see rental growth more widely across the UK.”

In addition to dropping supply and rental growth, Savills suggests the lack of development may also cause a rise in refurbished office space across the regions.