Birmingham office market falls behind UK rivals
Birmingham must concentrate of future opportunities after seeing office take-up fall behind its major competitors, property analysts have said.
Manchester, Glasgow and Bristol were all ahead of Birmingham in terms of take-up last year as the city struggled to match the exceptional performance in 2015.
Manchester again recorded the highest annual take-up among the regional cities, with 1.3 million sq ft.
Jonathan Carmalt, of JLL, said: “It has to be said Birmingham, after an exceptional year in 2015, didn’t perform as well in 2016 although still managed to achieve only just below the 10-year average at 700,000 sq ft. However, it’s the opportunities we have going forward that will create the catalyst for growth.
“With the legislative hurdle now crossed for HS2, we have a major competitive advantage in the region and share of voice that we need to capitalise on.”
Launching the company’s new office outlook report, Mr Carmalt added: “We also now have the highest quality new build office space coming forward to accommodate occupiers and much of the tired old space has been or is being refurbished.
“After a continued period of declining vacancy, the recent upturn in the development pipeline should help alleviate the scarcity of grade A supply. This reflects a change in mood from investors and a confidence in the city reflected by all the key indicators pointing to record years of take-up to follow.”
Speculative space under construction in Birmingham went up from 283,300 sq ft in Q4 2015 to 1,080,900 sq ft in Q4 2016 as HS2 prompted investors to progress prime new office builds, most notably Three Snowhill.
“Certainty in the economy, politics and business stimulates growth and that is the situation we now have with HS2. We’ve already seen some relocations because HS2 Ltd brought its headquarters here, however, now we expect a wave of further lettings. We’re not just talking to related industries and suppliers, but occupiers attracted to the city’s heightened profile and the quality of life we are able to offer,” said Mr Carmalt.
Whilst Brexit continues to cloud the horizon, JLL said it would be sometime before the full effects of leaving the single market were known.
More immediate factors impacting property sector are likely to be devolution and the election of a new West Midlands Mayor, it added.
• Whereas Birmingham saw a sharp contrast between the two halves of the year, following the June referendum, the situation in Solihull and the M42 corridor was far more stable.
KWB said the Solihull and M42 office market had achieved almost the same amount of square footage in both halves.
Of the 312,497 sq ft total transacted in the year, 154,341 sq ft was transacted in HY1 and 158,156 sq ft in HY2.
Furthermore, KWB said enquiry levels were currently up on where they were this time last year – indicating a defiantly healthy property market.
Highlights during the year included two landmark deals – 114,000 sq ft at International House, an off-market letting, to Interserve, and a sale of 80,000 sq ft at Parkside on Birmingham Business Park to Changan.
Mark Robinson, director, KWB
“The market for offices in Solihull and the M42 corridor is typically more sustainable than Birmingham city centre, as can be said for many out-of-town office locations, and industrial locations also,” said KWB director Mark Robinson.
“The impact of a significant economic or political event (Brexit) tends to have a more visible effect on the transaction figures of a city centre, whilst the business park market has a wider and more diverse range of business sectors that leads to a more sustainable level of demand.
“It is also worth noting that one of the foremost trends in the Solihull and M42 office space market has been consolidation – this is a cost saving measure, and an event such as the referendum will only mean additional impetus to make a move into more efficient and cost-effective accommodation.”
Mr Robinson agreed that the impact of Brexit was too soon to quantify.
