Birmingham office take-up well ahead of five-year average
OFFICE take up in Birmingham city centre is on track to reach circa 800,000 sq ft (74,320 sq m) by the end of 2016, according to a new study.
Savills said top Grade A office rents were back up to pre-recession levels at £32.50 per sq ft (£350 per sq m) compared to £30 per sq ft (£323 per sq m) in 2015.
Full year take up is therefore set to be well ahead of the five-year average of 699,000 sq ft (64,937 sq m), although lower than the 996,000 sq ft (95,528 sq m) total of 2015.
The largest CBD deals of 2016 by size were all linked to the consolidation and relocation of existing occupiers within the city, rather than new entrants. These include PwC taking 90,000 sq ft (8,361 sq m) at Paradise, Network Rail acquiring 83,406 sq ft (7,748 sq m) at Baskerville House and Pinsent Masons taking 40,538 sq ft (3,766 sq m) at 55 Colmore Row, former home of law form Wragge & Co.
Savills predicts that in 2017 the M42 corridor could follow the pattern seen in the city centre, with rental growth potentially followed by the first speculative office development out of town for a decade, due to increased demand.
Headline rents in the M42 market are now £22 per sq ft (£237 sq m) to £23 per sq ft (£248 per sq m) compared to £19.50 per sq ft (£210 sq m) in 2015, and likely to continue on an upwards trajectory with capacity restricted.
Nick Williams, office agency director at Savills, said: “After another strong year for Birmingham’s office market, we expect supply constraints to intensify both in and out of town in 2017.
“A number of central government requirements currently in the market will crystallise and erode city centre stock further.
“In the M42 Corridor, we could well see the first speculative development out of town for more than 10 years, as the positive effects of HS2-linked relocations and ‘north-shoring’ firms seeking cost efficiencies outside of London are felt in the city centre and beyond.”
