Birmingham office occupiers ready to restart expansion – Colliers International
While demand for office space remains sluggish in most UK regional markets, the Birmingham Central Business District has recorded its highest quarterly take-up for nine months. Grade A vacancy levels for office space in Birmingham are now the lowest for three years, with City Core Grade A availability at 23.1%, down from a high of 32% in June 2009, says Colliers International. The firm says the increase in take-up and higher absorption levels within the City Core indicate occupiers’ desire to restart recruitment and expansion programmes.
The firm says Grade A take-up during H1 2011 was lower than for the previous six months but absorption in the City Core doubled. This was partly due to the completion of the Cube, where the Highways Agency took 56,000 sq ft, it points out. Colliers says other notable recent transactions in Birmingham include the 38,000 sq ft taken by the Ministry of Justice at Axis on Holiday Street, and Deutsche Bank signing for 27,600 sq ft at Baskerville House.
Looking ahead, Colliers predicts that Grade A absorption and take-up will accelerate in Q3 2011, with large Grade A requirements expected. RSM Tenon, Grant Thornton and Chartis have all committed to acquire core new-build office space in the city, the firm notes. It adds that HSBC and Lloyds could each be searching for more than 100,000 sq ft in order to consolidate existing operations, while Deutsche Bank is thought to have a further 80,000 sq ft search active and PricewaterhouseCoopers has an expiry in 2014 that will require a search for more than 100,000 sq ft from the middle of next year.
With the focus of Grade A absorption now clearly on the City Core, and no significant completions due in Birmingham during the next year (and just one speculative scheme under construction at the moment), Colliers expects “continued healthy positive absorption for good quality product,” at an average of more than 250,000 sq ft per annum in the City Core during the next three years. Prime Birmingham office rents are still £27.50 per sq ft, and Colliers expects this to remain in place for the rest of 2011.
