Office take-up falls in Birmingham in Q2 – report

OFFICE take up in Birmingham fell in the second quarter of 2010, according to new research.

The city saw it drop back to 111,000 sq ft from 170,000 sq ft period-on-period but up from 84,000 sq ft year-on-year.

This included a near halving of Grade A transactions, says the latest research from real estate advisor DTZ’s Property Times report.

It says future leasing activity is likely to continue to be subdued and attributable to M&A activity or consolidation and efficiency plans to minimise costs.

Significant deals which took place during Q2 included the 11,000 sq ft let to Friend LLP at Brindleyplace , the 10,000 sq ft deal with Birmingham PCT in Hagley Road and BPP Law School moving to 13,500 sq ft at Two Colmore Square, the largest Grade A deal of the period.

Recorded annual take-up is forecast to fall back in 2010, given the influence of the 196,000 sq ft Birmingham City Council deal at Aston Science Park in Q3 2009 on the overall 2009 total, the reports adds.

Prime rents are expected to remain flat in Birmingham at £27.50 per sq ft over 2010/11 while recorded annual take-up is forecast to fall back in 2010 on the overall 2009 total.

Across the nine UK regions the report studies, occupier sentiment “took a cautious turn” during the second quarter of the year because of the election and Emergency Budget.

David Tonks, head of office agency at DTZ in Birmingham, said: “The current market does present occupiers with the opportunity to acquire high quality space on competitive, flexible terms.

“Whilst occupiers from all sectors recognise the opportunity, current evidence in the market suggests that the combined effect of the election, the budget, the autumn spending review and general economic uncertainty has limited the scale of active demand coming to the market.

“However, the underlying picture is more positive. A broad range of companies are actively considering their accommodation strategy to ensure that, where possible, the opportunity provided in the current market is capitalised upon.”

The report goes on to say that lower activity levels contributed to an increase in availability, although the amount of Grade A space still falls as occupiers take advantage of the market to upgrade to better quality space.