Market snapshot

Office Market Pulse Birmingham Q3 2013

After another strong quarter for the Birmingham office market, take-up for the year-to-date has already surpassed 2012's full year total; a clear indication that market conditions are significantly improving.

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:

Year-to-date take-up surpasses 2012 total

  • Birmingham’s office market has had another encouraging quarter, with take-up reaching 177,282 sq ft. Take-up this year-to-date has already surpassed 2012’s full year total. We expect total take-up for 2013 to return to the long-term average.
  • The average deal size remains low at 4,665 sq ft, with more than half of the transactions falling below 3,000 sq ft, and approximately 75% below 5,000 sq ft.
  • Serviced office provider i2 has taken 24,000 sq ft at Two Snowhill, extending its city centre presence and taking further advantage of the flexible serviced office market.
  • In addition, German insurance group, Allianz, has taken 15,000 sq ft at Colmore Plaza, adding to the list of international companies choosing to locate in Birmingham city centre.

For an annual comparison of take-up click here.

Significant occupational transactions Q3 2013

Property Size (sq ft) Landlord (s) Tenant / Purchaser Lease
Two Snowhill 24,000 Hines Ballymore i2 Confidential
Colmore Plaza        15,000         Carlyle    Allianz   Confidential

Obsolete office stock feeds demand for student housing

  • With approximately £4m sq ft of obsolete office stock in the market, we are seeing increasing interest from investors and developers looking to convert obsolete office space into student accommodation, taking advantage of low capital values and relaxed planning laws.
  • Following the recent growth of student numbers in Birmingham, demand for student housing has rapidly exceeded supply which has led to the current shortage in the city. 
  • An example of this was the 130,000 sq ft acquisition of 1 Hagley Road by Seven Capital. This Edgbaston office building was acquired for the purpose of conversion to residential/student accommodation in Q3.

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

Growing appetite for investment in the regions

There is continued appetite from institutional investors for regional offices given the more favourable yield profile compared with the London office market. With signs of a recovering occupational market, investment demand is expected to strengthen further.

The next 12-24 months will be prime time to invest in good quality, well located buildings. Market dynamics are very compelling with the impending imbalance of grade A supply, and the substantial inward investment into the city, such as New Civic Library and the redevelopment of New Street Station. Recent transactions include:

  • One Brindley Place - £30.00m (6.3%)
  • 84 Colmore Row, Birmingham - £11.00m (5.8%)
  • Tungsten Building, Blythe Valley - £6.26m (6.94%)

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

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