Market snapshot

Office Market Pulse Birmingham Q1 2013

Birmingham saw over 100,000 sq ft of take-up in Q1 which is double the level of deals compared to last year. Despite this, pessimists in the market are predicting the lowest yearly take-up in recent years for 2013.

Birmingham has in fact, seen significant activity and with current deals being signed for the likes of DAC Beachcroft, Deutsche Bank, and DWF - totalling approximately 200,000 sq ft, 2013 could well prove to be a resurgent year for the Birmingham market.

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:

The truth behind the stats

Although take-up in Q1 reached just 113,326 sq ft, this was in fact a 107% improvement on Q1 2012. Levels have not surpassed this since Q1 2010.

Disappointingly, no deals above 12,000 sq ft were seen in the city centre, which resulted in a low average deal size of just 3,778 sq ft. 

On the face of it, the statistics indicate another tough year ahead. What they do not show however, is the volume of larger requirements that are soon to be fulfilled including; DAC Beachcroft (circa 60,000 sq ft); Deutsche Bank (circa 100,000 sq ft); and DWF (circa 30,000k sq ft).

With continued strong demand driven by lease activities, grade A supply - which now stands at less than two years - will continue to erode; resulting in a hardening of the incentive packages which occupiers have enjoyed over recent years.

For an annual comparison of Q1 take-up click here.

Significant occupational transactions Q1 2013

Property Size (sq ft) Landlord(s) Tenant Lease info
Colmore Plaza 11,455 Carlyle Group Marsh 10 year lease
£27.50 per sq ft
One Colmore Row 8,500  Amber Real Estate Amber Real Estate - owner will occupy part Building purchased for part- own occupation
Rutland House 7,793 Squire Sanders Forresters 5 year lease

The growing case for conversion

Around 4m sq ft of Birmingham's 18.45m sq ft office stock could be deemed obsolete and is unlikely to be occupied as office space again. Approximately 50% of this could be converted for alternative use.

While many developers have already taken advantage of obsolete buildings through conversion to hotel use, this is fast becoming a saturated market.

Demand for free schools continues apace, but with the UK's housing shortage and the government's recent relaxation of the planning laws, we may see more conversions to residential use.

With existing property values around £30 - £50 per sq ft, and conversion costs in the region of £70 - £100 per sq ft, there is potential to add significant value. However, having strong market knowledge will be key to identifying and unlocking these opportunities.

For a breakdown of current availability by grade click here.

Read our Office Market Review 2013: Addressing Obsolescence.

How did the investment market perform in Q1 2013?

Total investment in Q1 2013 rose by 8% in comparison to the previous quarter, reaching £8.05bn. 

The average deal size reached a new high of £28m. 

This activity was despite investment in central London offices falling by 25% in Q1 2013.

What does this mean for the market? Find out in UKIT 2013 and read our predictions for the year ahead.


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