Birmingham industrial and office yields strengthen
COMMERCIAL property yields in Birmingham are among the best performing in the UK according to latest research from CBRE.
Average yields for the region’s prime industrial property hit 5.75% in the first quarter (Q1) of 2014. Only London, at 5.05%, outperformed the city. In Manchester and Edinburgh, returns are 7%.
According to CBRE’s Ed Gamble, evidence suggests that yields in the city have fallen even further during Q2.
He said: “We have a lot of money chasing limited stock. The occupational market is showing strong growth, so all the fundamentals are there.
“The shift has been dramatic: this time last year we were selling ten year income at 8%.”
The improvement in yields has yet to be matched by rental growth. Average prime ‘shed’ rents in Birmingham are now circa £5.50 per sq ft, compared to £12.50 in London, £6 in Glasgow and Edinburgh and £5.95 in Manchester.
Richard Meering, a senior director in CBRE’s national logistics and industrial agency team, expects them to play catch up soon.
He said: “There is definitely pressure on rents. The £6 per sq ft barrier is already rumoured to have been broken in the region.
“IM Properties did their last deal at Birch Coppice at £5.75 and are now quoting £6 per sq ft for their 152,000 sq ft speculative unit at the same scheme.”
Prime city centre office yields in Birmingham are also showing strong signs of improvement.
In Q1 they reached 5.75%, matching Manchester and Edinburgh but ahead of Glasgow (6%) and Belfast (7.25%). Only London’s West End (3.75%) and City (4.5%) markets better Birmingham.
