Birmingham’s grade A office availability levels are at their lowest for three years, sparking fears of supply crisis in the city.
According to the latest research from Colliers International, the take-up rate of grade A office stock in Birmingham city centre is set to hit 225,000 sq ft.
The agent’s Net Stock Absorption Survey shows the city centre has enjoyed its highest quarterly take up for nine months, with recent high-profile lettings to the Ministry of Justice (38,000 sq ft at Axis, Holiday Street) and Deutsche Bank (27,600 sq ft at Baskerville House).
Stock absorption – the difference between take-up and stock returning to the market – is also improving, with 120,000 sq ft of office space in the city’s central business district absorbed in the first half of this year, compared with around 60,000 sq ft in the second half of 2010.
As a result, the availability of grade A office space in the city centre has now fallen for the third half-year in succession, with current new-build grade A vacancy levels at just 4.5% of total stock.
Craig Satchwell, head of office agency at Colliers in Birmingham, said: “Worryingly, there is just one scheme with a speculative element currently on site – Hines’ and Ballymore’s Two Snow Hill, which won’t be completed until 2013.
“With grade A take-up in the city centre anticipated to average 250,000 sq ft over the next three years, occupiers with a medium to longer-term requirement will have an extremely limited choice.”
A number of lease expiries are predicted in the city over the next couple of years, including PWC, which has a lease expiry in 2014, while RSM Tenon, Grant Thornton and VAX have all committed or are close to committing to acquire more than 100,000 sq ft of new space between them.
While the development of further speculative space is unlikely, Satchwell believes that between now and 2016, around 1.1m sq ft of office space will come under review owing to lease events – equivalent to just over three years of typical grade A take-up.
Rents in the city centre will remain static, said Colliers, at £27.50 per sq ft.
samantha.mcclary@estatesgazette.com
