Market snapshot

Office Market Pulse Birmingham Q4 2012

Birmingham city centre's office market finished 2012 strongly with the last two quarters accounting for almost 75% of the year's take-up. Interestingly, it was the return of larger lettings - rather than the number of transactions - that brought about this upturn in fortunes, with three deals over 20,000 sq ft completed in Q4.

With rumours still abound of Deutsche Bank committing to over 80,000 sq ft, and a number of 20,000 - 50,000 sq ft requirements coming to market, it is hoped this momentum can be maintained.

In this issue:

Cautious optimism

Take-up reached 185,401 sq ft in Q4, matching the final quarter in 2011 and far exceeding all other Q4 figures since 2007.

Although yearly take-up is approximately 25% down on the long term average, the last two quarters give cause for optimism with average deal size increasing to over 5,000 sq ft - more than double that achieved in a disappointing first half of the year.

Other than Two Snowhill, there are no new build office developments currently under construction. Until confidence in occupier demand returns, the only new space that will come to market is through the refurbishment of existing stock.

Highcross and Bruntwood have demonstrated, at Livery Place and Centre City respectively, that a well conceived and executed refurbishment of well located space will generate interest even in the most challenging of markets. However, with several buildings becoming close to fully occupied and others being snapped up for educational and leisure uses, such opportunities are becoming increasingly difficult to come by.

For an annual comparison of take-up click here

Significant occupational transactions

Property Size  Landlord(s)  Tenant/Purchaser  Lease information 
2 Colmore Square 40,036 sq ft Nurton Developments Shoosmiths 10 year lease
Centre City 29,844 sq ft    Bruntwood HMCTS Confidential

3 Brindleyplace

 

27,913 sq ft 

 

Hines Moorfield

 

I2

 

10 year lease

£24.00 per sq ft

Office to residential conversion opportunity welcomed

Developers have a window of opportunity to avoid building affordable housing under a new Government policy allowing the conversion of offices to residential without planning permission. The new development rights will also mean developers will be able to avoid a number of key planning contributions.

Inevitably, developers are likely to focus on poorer quality buildings which can be bought cheaply and will therefore provide the most profit. While recycling existing tired buildings is a positive for the city, it could weaken Birmingham’s increasingly limited office supply. Read more here.

For a breakdown of current availability by grade click here.

Cambridge investment update

 

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Ian Leather
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01604 664399

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