Midlands business park space demand ‘weak’

DEMAND for business park space was weak while availability increased in the first half of 2010, according to new research.

Property consultancy GVA Grimley ‘s Business Parks Review, which monitors office space supply and demand across UK business parks, also shows new construction activity slowed to a standstill with few developers initiating new schemes speculatively.

Rental values continued to fall in most submarkets although the pace of decline eased, its research claims.

Occupier activity on business parks in the Midlands remained subdued in the first half of 2010 with the recorded take-up of 208,000 sq ft of floor space around half the five-year average.

Carl Potter, Birmingham office director and head of national offices at GVA Grimley, said: “The occupier market was characterised by a background churn of smaller deals rather than any headline-grabbing lettings.

“Binley Business Park in Coventry, Birmingham Business Park and Blythe Valley in Solihull all saw healthy levels of occupier transactions.”

Headline rents generally continued to come under negative pressure across the region, it said, with the GVA Grimley rental index showing an annual fall of 2% for the region as a whole.

Mr Potter added: “Despite the fall in rents, we have seen a few cases that have bucked the regional trend.

“For example, the out-of-town markets of Coventry, Wolverhampton, Leicester and Northampton all saw prime headline figures holding steady, while in Derby rents increased by 3%.

“Availability continued to increase during the first half of 2010, reaching its highest level in the survey’s 14-year history.

“A 16% increase since the start of the year was recorded, bringing total available floor space to 2.8m sq ft by mid-year.

“The vacancy rate meanwhile crept up to 15%, which is also a record high for the Business Parks Review.”