Birmingham’s office market could be heading for a record year – but the delivery of new stock needs to be carefully managed to maintain long-term growth in the city.
The Birmingham office market saw the strongest second quarter since the downturn of 2008 with a total of 521,136 sq ft take up – representing 75 per cent of the annual average in just one quarter and the largest volume of any city outside London.
The strong performance represented a 358 per cent increase on the same quarter last year thanks to major deals including HSBC’s 212,000 sq ft pre let at Arena Central but even without that deal, the second quarter was still 174 per cent ahead of the corresponding quarter last year.
Alex Tross, Director of Office Agency at LSH in Birmingham, said there was a real chance that the 2015 total could surpass the record 2008 total of 959,000 sq ft but the challenge was maintaining the current momentum for the long term.
He said: “These are incredibly positive figures for Birmingham and reflect the city’s growing reputation as a business destination with a significant amount of the deals coming from inward investment rather than just from businesses relocating around the city.
“There are still a number of key requirements in the market and the bringing forward of a number of key developments is going to be critical to meet this demand but it is important that there is managed delivery to market.
“After a fallow period we are now seeing a raft of schemes either in planning or coming out the ground and all will be crucial in the long-term but if they all come to market at the same then there is the potential that it will stifle rental growth as we saw following the downturn in 2008 as prices were pushed down by more aggressive deals.”