Market snapshot

Office Market Pulse Birmingham Q1 2014

Although Q1 take-up was marginally down on the same period last year, the Birmingham office market is starting to feel the impact of the improving economic climate and with occupier confidence gathering pace, we expect take-up to increase as the year progresses.

You can download a PDF version of this Birmingham Office Market Pulse, or to read and sign-up to receive Office Market Pulses from other UK centres, click here.

In this issue:

Birmingham office take-up down on same period last year

Total Q1 take-up for the Birmingham office market was 102,353 sq ft - a 10% decrease on last year’s Q1 total (113,326 sq ft). On the face of it, this is a disappointing result however, Q1’s performance should not be used as a barometer for the year ahead; the Birmingham property market is starting to feel the impact of the improving economic climate and with occupier confidence gathering pace, we expect take-up to increase as the year progresses.

The average size transaction for Q1 was circa 3,700 sq ft – almost identical to the Q1 2013 average of 3,800 sq ft. The key difference this year however, is that the majority of Q1 take-up has been secondary accommodation when, historically, it has been grade A lettings that dominate.

The average deal size suggests that Birmingham occupier activity continues to be dominated by medium sized firms.

For an annual comparison of take-up click here.

Significant occupational transactions Q1 2014

Property Size (sq ft) Landlord (s) Tenant / Purchaser Lease
information
St Phillip’s Point 16,682 Ediston UK Real Estate Weightmans 10 year lease, 5 year break option
£15.00 per sq ft
19 George Road  12,138 Calthorpe Estate  Health Trust Europe  10 year lease
£14.00 per sq ft 
Tricorn House  10,000  CEG  Perkins Slade  10 year lease, 5 year break option
£12.50 per sq ft 

Private Rented Sector to fuel next phase of conversion

We have seen a number of obsolete office buildings converted to hotels, but as that demand for rooms has largely been satisfied, we expect the Private Rented Sector to fuel the next phase of conversions.

There is continued scarcity of grade A accommodation and if the Q1 trend of secondary space dominating take-up continues, better quality secondary supply will rapidly decline. This will inevitably lead to further refurbishment of poorer quality accommodation to bring it up to market standard.

A reduction in the level of office stock across all grades is positive for the market. Occupier demand that can’t be satisfied will ultimately result in sufficient confidence to warrant a return to speculative development.

For a breakdown of current supply by grade, click here.

Property investors turn to the regions

Investment in the UK commercial property sector during the first quarter of 2014 totalled £10.9bn - a 35% increase on the corresponding period last year and the third highest quarterly level since the start of 2007.

The regional markets are receiving more attention from investors, as prime Central London prices continue to rise.

Investment in the regions more than doubled to £4.2bn, compared to £2.0bn during the first quarter of 2013. It now accounts for 39% of the total, against 25% in the corresponding period last year and 33% during the final quarter of 2013.

Notable transactions include:

  • 27 Fleet Street, Birmingham to LaSalle Investment Management for £51m
  • Victoria Square House, Birmingham to Ardstone Capital for £42m
  • Alpha Tower, Birmingham to CEG for £14m

To view our latest UK Investment Transactions (UKIT) report, please click here.

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Alex Tross birmingham commercial property consultant office agency
Alex Tross

0121 237 2307

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Alex Tross
Director - Head of Office Agency - Birmingham.

0121 237 2307

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