Birmingham’s office market rounds off 2020 in second place for total investment volume
Birmingham’s office market came second of the nine core cities for investment volume in 2020, with its Q4 results dominated by strong performance in the out-of-town market, securing the largest deal of the quarter.
Avison Young’s latest Big Nine report highlighted that for 2020 as a whole Manchester led investment activity at £325m, followed by Birmingham at £278m and Bristol, Leeds and Edinburgh at circa £200m of transactions each.
Due to a healthy start to the year, overall activity in Birmingham city centre during 2020 outperformed the out-of-town sector, yet both markets were below average, with 520,000 sq ft office take up in the city centre and 172,000 sq ft out-of-town.
Q4’s biggest deals for Birmingham saw Lounge take up 53,882 sq ft at Blythe Valley Park, Solihull, and in the city centre, Axa Insurance 14,208 sq ft at St Philips Point.
Despite the challenges of the pandemic, a raft of developments under construction or due for completion are paving the way for a strong 2021. There is 434,000 sq ft of immediately available grade A space in the city centre and two further speculative developments under construction. 228,000 sq ft 103 Colmore Row is fully available and due for completion this summer and 280,000 sq ft 1 Centenary Way, Paradise, is due to complete towards the end of 2022 and where there is strong interest.
In addition, CBRE Global Investors has just started a major refurbishment of 8/10 Brindleyplace, totalling 213,000 sq ft, which completes in Q3 2022.
Carl Potter, principal and managing director of the Birmingham Office at Avison Young, said: “Understandably, both the city centre and out-of-town office markets took a hit in 2020 as a result of COVID-19, but Birmingham’s pre-pandemic performance and continued investment stands it in good stead to recover and return to growth.
“While several enquiries have been temporarily put on hold, we expect requirements to re-emerge as the year progresses and uncertainty lifts. Requirements are healthier for better quality space and Birmingham will benefit from the Government’s ‘levelling up’ agenda, which aims to move thousands of civil servants out of London. In fact, plans for the Government Property Agency’s third hub in Birmingham are well underway.”
Investment volumes across the Big Nine cities totalled £580m during the final quarter of 2020, 2% up on the ten-year average and the busiest quarter of the year. However, with slower activity in the previous two quarters, the total for 2020 amounted to £1.5bn, down 34% on the ten-year average.
Q4 proved positive for the office market, as there were four large deals between £85m and £120m. These were led by two in Manchester: Helical sold the Powerhouse Portfolio, comprising three Manchester office assets for £119mand Warrington Borough Council forward funded BT’s new super Hub at 4 New Bailey for £112m, reflecting a yield of 4.25%.
Oval Real Estate purchased 1 Colmore Square in Birmingham for £87m and M7 bought Bridgwater Place in Leeds for £84m.
