Office take-up outside capital on the rise

OFFICE take-up in cities outside the capital increased by 63% in the second quarter of 2011, according to new research.

However, the increase was due to largely to deals conducted outside the West Midlands in Cardiff, Leeds and Nottingham.

The main driver of the increase was a 190,000 sq ft pre-let to Admiral Insurance, for a new HQ in the Welsh capital from 2014, suggests the Q2 Office Property Times by real estate advisors DTZ.

Leeds saw the highest take-up for almost four years while in the Nottingham the increase was due largely to a 59,000 sq ft transaction by legal firm Browne Jacobson.

The largest deal of the quarter in Birmingham saw the Ministry of Justice take 39,000 sq ft of grade B space at The Axis, in Holliday Street. Overall take-up was up to 158,000 sq ft in the second city.

The most prominent grade A deal in Q2 was to Deutsche Bank, which took an additional 28,000 sq ft in Baskerville House, the report says.

Regional cities’ availability remained unchanged at 13.5m sq ft in Q2 with grade A stock being eroded further, falling to below 4m sq ft in Q2 for the first time since Q4 2008.

DTZ associate director Matthew Long said: “Take-up in Birmingham city centre in the second half of 2011 is forecast to reach around 200,000 sq ft, with several lettings in excess of 20,000 sq ft set to acquire grade A space in Birmingham’s central core. This would take the annual total to 440,000 sq ft.

“As a result, availability of well-located grade A space will continue to fall, as new lettings and incumbent tenants take the opportunity to upgrade into better quality space.

“Prime headline rents are forecast to edge up in early-2012 and less generous incentives are also likely to be in the market by the year-end for this quality stock.”