Market snapshot

Birmingham Office Market Pulse Q2 2016

This follows record transaction volumes in 2015 and again in Q1 this year.

The Q2 figure is the 3rd largest since 2007 and was comprised of 40 deals which compared to the long terms quarter average of 33, suggests that the market continues to perform very well. One notable deal was the lease of 83,000 sq ft office space to Network Rail at Baskerville House in the city centre.

This quarter’s take-up is encouraging as it was felt that the uncertainty in the run up to the EU referendum would cause the market to slow but it appears that has not been the case.

Uncertainty continues post referendum but Birmingham is well placed to weather any future storms as the city’s fundamentals are still rock solid, including a good pipeline of grade A and refurbished stock and the infrastructure investment into the city over the last few years. 

In this issue:

Brexit bounce back for occupier market?

The Newcastle office market made a strong recovery in Q2 2016 following a slow start to the year, with combined take-up for the city centre and out-of-town markets totaling 186,544 sq ft – well ahead of the five-year quarterly average.

At 132,582 sq ft (Q1 2016: 131,102 sq ft), take-up was dominated by activity out-of-town. However, the city centre saw the biggest recovery, with almost double the amount of space transacted in the previous quarter, at 52,977 sq ft (Q1 2016: 18,101 sq ft). This was boosted by Convergys’ 35,000 sq ft letting at The Rocket. 

Despite this marked recovery, the impact of Brexit still remains with a number of requirements taking some time to progress, albeit the initial indication is that long-term requirements are still moving forward.

Key occupational transactions, Q2 2016


Size (sq ft) 

Landlord / Vendor

Tenant / Purchaser

The Rocket, Stephenson Quarter
Cobalt 7B
Leeds Building Society
Spectrum 3 Seaham
Hilford Group
Res Q

Source: Lambert Smith Hampton 

Grade A supply falls below 100,000 sq ft

Grade A supply in the city centre continues to fall, with the letting of The Rocket bringing the availability to just under 100,000 sq ft.  As such, those larger occupiers with as yet unsatisfied requirements have very few available options.

However, law firm Eversheds is due to vacate Central Square South in the autumn, following which the space will be fully refurbished, releasing an additional 50,000 sq ft into the market.

Buildings are still attracting strong interest from student developers keen to make progress before the impending CIL comes into force later in the year, which is impacting on the amount of available secondary space.

Wellbar Central sets new headline rent

A new headline rent of £23.00 per sq ft has been established following the letting of 4,507 sq ft at Wellbar Central to DAC Beechcroft.  Although the letting of The Rocket was widely anticipated to set a new headline rent, it is understood that the final figure agreed was below the quoting figure of £23.00 per sq ft. 

The combination of secondary office stock levels continuing to be depleted by student developers and increasing occupier demand for the limited available grade A space is likely to fuel further increases in headline rents as we move throughout the second half of the year. 

Highest quarterly office transaction volumes since 2007

While investment activity across the UK generally remained subdued in Q2 2016, Newcastle bucked the trend by recording its highest quarterly office transaction volumes since Q1 2007, at £117m. There has however been a slowdown in stock being brought forward as a result of Brexit and, as such, current market appetite is hard to gauge but we would expect yields to remain stable for prime office stock.   

The regions are likely to continue to outperform London over the short to medium term, both in terms of investment and development, until we have a better understanding of the capital’s future outside of the EU.

Key investment transactions, Q2 2016


Value (£m) 

Yield (%) 



Science Central, Gallowgate
65 Unknown
Legal & General
Newcastle City Council
Newcastle University Business School 
50 Unknown
Lime Property Fund

Balliol Business Park
2 Unknown
Methnor Properties
Kennedy Wilson Europe 

Source: Lambert Smith Hampton 

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Alex Tross birmingham commercial property consultant office agency
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0121 237 2307

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Alex Tross
Director - Head of Office Advisory - Birmingham.

0121 237 2307

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