Birmingham office space hits nine-year low

55 Colmore Row
X The Business Desk

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The available office space in Birmingham has reached a nine-year low, with agents in the city expecting the situation to become even worse during the rest of 2017.

There is currently 1.76m sq ft of space to let in the city – nearly 1m sq ft below its 2012 peak. Stock has been fallen in each of the five years since then, while forthcoming deals at 55 Colmore Row and Arena Central will take further chunks off the market.

Will Ventham, who heads the Midlands office agency team at CBRE, said: “First impressions suggest the Birmingham office market is in a position to fulfil anticipated demand in the short term. The alarming reality is that total availability could fall below 10% over the course of the year.”

Around 37% of the available space is new or pre-let, with the remainder secondhand, according to analysis by CBRE.

The city’s only two committed development schemes – Three Snowhill and the first phase of Paradise Circus (One and Two Chamberlain Square) – support the region’s inward investment potential so far as large corporate consolidations are concerned.

However, the existing Grade A pipeline is in danger of dragging down the market.

Recently completed ‘redevelopment’ schemes within the central business district have seen high levels of demand, with Cornerblock and One Colmore Square delivering the most significant lettings in Q2 2017, to Arcadis and Hays respectively.

Mr Ventham said he expected this trend to continue into the second half of the year, with 55 Colmore Row offering a compelling prime Grade A proposition, supported by the recent opening of Pinsent Masons’ new office in the building. The completion of The Lewis Building by Legal & General Investment Management will inject a much-needed 94,000 sq ft into the market.

First half take-up totaled 234,266 sq ft, marginally higher than the previous six months, but 35% down on the five-year average. All the space let was secondhand, reinforcing the lack of oven-ready new build.

CBRE expects take-up for the remainder of the year to support the argument for sustained investment into new and existing offices across the city.

Mr Ventham said: “Delayed decision making and inertia as a result of economic uncertainty continued into 2017, resulting in subdued take-up for the first half of the year. However, the fundamentals of the Birmingham offer remain strong and we are optimistic about the lead up to year end.

“The emergence of the collaborative and serviced office sectors, directly influenced by the prospect of HS2, will impact on take-up and further impinge on supply.

“Evidence of latent tenant demand will result in improved take-up figures for Q3 and the much mooted Government Property Unit’s hub requirement remains unsatisfied in the city.”

He said while the economic uncertainty had not been helpful, it was likely this had merely delayed short-term decision making rather than shelving requirements altogether.

“I’m confident that we will see strong take-up figures recorded for the full year,” he added.

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