Birmingham office rent ‘cheaper than a decade ago’

RENTING prime office space in Birmingham city centre is cheaper than it was a decade ago, new research suggests.

Although headline rents are higher than they were in 2000, currently around £4 per sq ft more at £28, the amount of incentives landlords are being forced to include to secure tenants means they are receiving less income for their space.

According to a rental analysis report by real estate advisor CB Richard Ellis, factoring in rent-free periods means landlords of grade A office space are receiving around £16 per sq ft over an initial five-year term.

In net effective terms, it is around 50p less than a decade ago, the report says, and £12 less than in 2007 when the market was at its peak and prior to the credit crunch.

The research is based on headline grade A office transactions within Birmingham city centre since 2000.

Ashley Hancox, the head of regional office space at CBRE in Birmingham, said: “There is a gulf of around £11.50 between what landlords are asking for and what they are genuinely getting. It’s all in the small print.

“With rent-free periods of two to three years now typical on a 10-year lease, in reality landlords are discounting their headline rents by 20%.

“It’s no secret that the city’s supply of grade A space is dwindling and with no development pipeline to speak of, a handful of significant deals will quickly change this. Landlords will be in a position to offer fewer incentives.

“The next two or three major occupiers to take up space in the city will benefit from this historically low net effective rent and those who hold out will unfortunately lose out.”