COMMENT: A new beginning

THERE will always be someone trying – probably with the best of intentions – to talk up the market, but the figures don’t lie.

The central Birmingham office market is likely to finish the year with total lettings of around 450,000 sq ft – around 200,000 sq ft less than 2011 and the lowest total in memory.

There are a lot of office agents out there feeding off scraps and 5,000 sq ft churns are being celebrated as if they are huge inward investment deals.

But Birmingham isn’t doing any worse than other provincial cities. Occupier confidence is clearly the issue. Until the economy starts picking up, decisions about moving are going to be well down the list of corporate priorities.

A lack of pre-lets – and a lack of interest from funders in backing anything speculative – has left us with a flat development environment. The only office scheme of any note being built in Birmingham is Two Snowhill.

Ambitious plans have been announced for the likes of Paradise Circus and Masshouse – mixed use schemes with large office elements – but delivery of these is likely to be years away.

But property professionals will need no telling that famine can turn to feast very quickly in a sector intrinsically linked to wider economic fortunes and some industry watchers are already showing concern about a potential lack of new grade A space a couple of years down the line.

Triggers such as the re-development of New Street Station, the Metro extension and the runway extension at Birmingham Airport are all providing momentum locally and when things do pick up Birmingham should be well placed to win competitive battles with other cities for those elusive inward investors.

Outside of Birmingham – especially around the M42 corridor – things have looked decidedly brighter on the office lettings front. The likes of Blythe Valley Park in Solihull have been going great guns.

Industrial and distribution has had a decent year. Jones Lang LaSalle director Carl Durrant calculates that the Midlands pulled in 33% of all logistics deals for 100,000 sq ft and above in the UK, during the first nine months of 2012.

The only concern here is that deals of that size can wipe out existing stock very quickly and very soon there might not be enough supply to meet demand.

Hotels seems to be springing up at a rate of knots – it does make you wonder who is staying in them all – and the plans for further development in this sector suggest there is little sign of activity declining.

Mixed use schemes involving hotels or large retail still have the best chance of getting away.

In my opinion 2013 will be a better year all round for the commercial property market. I think things could start slowly but a number of market watchers are expecting confidence levels to rise in the Spring on the back of better news from Europe.

I think there is an underlying desire out there to get things moving. People just need a couple of months of genuinely good news to become more confident.

Once the requirements from would-be occupiers start increasing in number, things will start to move very quickly.

There’s a lot to look forward to but first of all there’s Christmas and the New Year celebrations. Have a great break.