Birmingham has more active enquires for grade-A offices than any other regional city in the UK.
According to Knight Frank’s latest Regional offices occupier and investment market report for Q2 2015, the city accounts for 945,000 sq ft out of 4.4m sq ft of office space enquiries across 10 regional cities – including: Aberdeen, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Manchester, Newcastle and Sheffield.
Jamie Phillips, a partner and head of the office team at Knight Frank’s Birmingham office, said: “It’s a great credit to Birmingham that more than 20% of regional office enquires are focused on the city, which is proving a draw not just to traditional indigenous occupiers, but to inward investors too.”
However, there are concerns about Birmingham’s ability to satisfy demand. Take-up in the second quarter of this year was higher than in any other regional city, with more than 520,000 sq ft transacted, reflecting a fourfold rise on Q1. Manchester boasted the second highest take-up outside London in Q2, with just shy of 400,000 sq ft of office take-up.
KF said Birmingham now has the lowest levels of grade-A stock outside London. “We have just one year’s supply. What’s more, half of this is not even available, it is still under construction,” said Phillips.
It will be more than two years before high-profile new-build schemes such as 103 Colmore Row (pictured), Arena Central and Paradise start delivering new space to the market. In the meantime, the focus will be on refurbishment schemes, including 1 Colmore Square, 55 Colmore Row and Two Cornwall Street.
Rents hover around £30 per sq ft in the city but are anticipated to rise to £31 per sq ft by the end of the year. By the end of 2016 Knight Frank is predicting prime rents in the city in the order of £33.50 per sq ft – breaking the pre-recession high.
Knight Frank says 900,000 sq ft of new space is forecast to be delivered by 2018, much of it speculative.
