Birmingham’s office market will see top rents rise to a post-recession high of £32.50 per sq ft (£349.80 per sq m) in 2016 with further room for growth anticipated, according to international real estate advisor Savills. The firm cites strong occupational demand intensified by companies ‘north-shoring’ and the future potential of HS2 as key drivers behind the growth.
Birmingham’s office market will see top rents rise to a post-recession high of £32.50 per sq ft (£349.80 per sq m) in 2016 with further room for growth anticipated, according to international real estate advisor Savills. The firm cites strong occupational demand intensified by companies ‘north-shoring’ and the future potential of HS2 as key drivers behind the growth.
Top city centre rents are now £30 per sq ft (£322.92 per sq m) compared to £29 per sq ft (£312.15 per sq m) in January 2015, says Savills, with total take up on track to reach 996,000 sq ft (92,528 sq m) by year end. This marks a 43% increase on the 695,000 sq ft (64,566 sq m) total in 2014. Key deals this year have included pre-lets of 212,000 sq ft (19,695 sq m) to HSBC at Arena Central and 115,000 sq ft (10,684 sq m) to Interserve near Birmingham International station and the site of the first HS2 terminus.
Savills highlights supply constraints as an ongoing issue for Birmingham’s office market, although the pressure will be relieved significantly by the 1.2 million sq ft (111,480 sq m) of Grade A space set to be delivered in the city core over the next three years. This includes 165,000 sq ft (15,329 sq m) of refurbished space at 55 Colmore Row. In terms of new build Grade A space, prime schemes such as Three Snowhill look well-placed to deliver much needed stock by 2018.
Jonathan Ottewell, associate director of office agency at Savills, comments: “This has been another exceptional year for the Birmingham office market in terms of demand and we are starting to feel the effects of ‘north-shoring’ as more occupiers move out of London in search of lower property and staff costs. The potential inward investment associated with HS2 has been another hot topic throughout 2015.
“Looking ahead to next year, we expect to see increased activity in the TMT sector and more office requirements from GPU and Central Government. With very low availability of Grade A space until later in 2016, this pent up demand is likely to push rents upwards in prime locations such as Colmore Row.”