Birmingham office take up set to exceed five-year average by more than a fifth
Birmingham’s core and fringe office take up is predicted to exceed 850,000 sq ft (78,965 sq m) by the end of the year as sustained requirements from HS2-linked occupiers continues to drive the market.
Should the take up figure be achieved, Savills said it would represent a total 21% above the five-year average for the city of 703,000 sq ft (65,309 sq m).
The property firm also said that the generally diverse nature of demand meant the city was remaining well shielded from the impact of Brexit.
The city’s serviced office sector acquired 82,000 sq ft (7,618 sq m) of space in the first three quarters of 2017, greater than any previous annual total.
This is due to occupiers increasingly seeing the appeal of flexible lease terms amid new HS2 and other infrastructure related contracts, as well as an emerging tech sector.
Serviced office operator iHub signed for 18,000 sq ft (1,672 sq m) at Colmore Gate while landlord CEG is supporting growing requirements for flexible space from both established businesses and start ups with the creation of co-working serviced office business Alpha Works at its Alpha building.
Additionally, following HSBC and Deutsche Bank’s decision to relocate over 1,000 roles from Central London to Birmingham, Savills said occupational cost pressures in the capital could see more London-based financial and insurance sector companies seek space in the city.
The firm estimates that the average annual saving in staff and property costs per employee when relocating from Central London to Birmingham is circa £20,000.
Nick Williams, office agency director at Savills Birmingham, said: “Strong city centre demand from a diverse range of occupiers is expanding the perceived boundaries of the core market and driving much anticipated rental growth in buildings that have benefitted from a comprehensive refurbishment strategy.”
Mike Barnes, of the firm’s commercial research team, added: “Robust take up combined with the fact that no new speculative developments are scheduled to complete until Three Snowhill and 1 & 2 Chamberlain Square in 2019 means competition for the best quality space will intensify.
“As a result we expect top city centre rents will rise from £33 per sq ft currently to in excess of £34 per sq ft by the end of 2019.”