Knight Frank’s figures show “remarkably subdued” office market
NEW research from Knight Frank shows a worrying lack of activity in the Birmingham office market in the first quarter of 2012.
Office take up totalled 54,500 sq ft, which is 62% below the long-term quarterly average.Knight Franks describes the market as “remarkably subdued”.
According to the firm’s research, there were a respectable 28 deals completed in the period but it is the absence of any larger transactions that lie behind Q1’s low levels of performance.The largest deal was a letting of just less than 8,000 sq ft to Inspired Gaming.
However, Knight Frank’s Jamie Phillips suggests the sector this deal came from could be significant.
“The two largest deals of the last quarter reflect positively on the city’s attractiveness to the gaming and media sectors which now have a strong foothold in the market. This is set to strengthen with Microsoft looking to commit further to the city and new tax relief for the games and animations industries announced in the budget,” he said.
“Also in contrast to the norm is how few of the lettings in Q1 were for Grade A space, however we expect Q2 take up to show a marked improvement with the recovery strengthening further in the second half of 2012.
“Falling Grade A supply is starting to impact pricing and while we have not yet seen an increase in rental values, we do anticipate a moderate hardening in rent free incentives this year.
“And as finance remains restricted, speculative development activity will remain subdued but some proposed refurbishment, including that of Five Brindleyplace, suggests that some confidence is returning.”
Birmingham’s Grade A supply has fallen by 20 per cent over the past 12 months to stand at 650,000 sq ft.
