Regional office take-up across the Big Nine markets has witnessed the strongest start to the year since prior to the economic downturn, with Birmingham recording its best ever figures for the period, according to the latest research from Bilfinger GVA.
The figures, released as part of the quarterly Big Nine report, covering city centre and out-of-town activity in the UK’s nine largest regional cities, show that the Birmingham city centre market recorded the largest take-up of any regional English city, a 52.6% increase on the five year quarterly average.
In total, 284,697 sq ft of lettings took place in the city centre, supported through a number of large-scale deals including the 90,000 pre-let of One Chamberlain Square at Paradise to PwC on a 20 year lease and Pinsent Mason’s 40,500 sq ft at the redeveloped 55 Colmore Row.
Activity in the out-of-town market, however, was more subdued and at 48,142 sq ft, is significantly down on the five year quarterly average of 91,709 sq ft.
Charles Toogood, Senior Director at Bilfinger GVA, said: “This unprecedented level of activity in the city centre market is a clear demonstration of the ongoing demand within Birmingham, both from inward investors looking to expand into new geographies and indigenous professional services firms seeking better accommodation.
“While the figures for the out of town market are lower than the average, there is still some movement, although a lack of speculative development has restricted the volume of available stock. However, with the ongoing redevelopment and refurbishment of a good number of business park properties combined with the culmination of legacy 20 and 25 year leases, we expect to see these figures improve generally.
“Overall, activity in the city has been phenomenal with considerable construction activity underway and M&G’s speculative development of the 420,000 sq ft Three Snowhill, the largest speculatively developed office scheme in the regions, contributing to the high levels of market confidence.”
Nationally, city centre and out of town take-up amounted to 2.3 million sq ft, 13% above the five-year quarterly average. City centre total take-up comprised 1.47m sq ft, 17% above the five-year quarterly average. Out of town total take-up amounted to 0.86m sq ft, 7% above the five-year quarterly average.
Carl Potter, Senior Director and national head of Offices at Bilfinger GVA, comments: “Take-up figures are up and are anticipated to maintain a strong run well into Q2. Net effective headline rents increased by an average of 7.5% across the Big Nine over the year to Q1 of this year, as rent free periods fell to 20.7 months on a ten year term. Nevertheless the rate of growth has slowed from the double digit annual growth experienced last year.”
Other major deals that lifted take-up in their respective cities to well above average included the 81,200 sq ft for EDF Energy in Bristol which saw take-up lifted 50% above average. Napier University in West Edinburgh also saw 107,000 sq ft secured in the largest out of town deal.
The Morgan Stanely deal in Glasgow saw 155,000 sq ft pre-let at HFD Property Group’s 122 Waterloo Street. The same scheme could produce a further 215,000 sq ft adjacent to Morgan Stanley’s space. Accountancy body ACCA has taken 55,000 sq ft in the city.
Manchester experienced a slower than expected start to the year, largely due to Freshfields’ anticipated 80,000 sq ft commitment to Muse’s One New Bailey not completing before the end of Q1. This and a series of other significant pending deals should strengthen Q2 figures.
The largest deal in Leeds comprised 45,000 sq ft for Zenith at out-of-town regeneration area Kirkstall Forge. 40,000 sq ft was also secured by Sky Betting and Gaming in the city centre.
90,000 sq ft of take-up in Liverpool in Q1 follows strong Q3 and Q4 2015 figures, with lettings comprising 26,000 sq ft, whilst in Cardiff a 12,500 sq ft deal to Opus Energy Ltd marked its largest transaction. Q2 is expected to see a significant increase in the Welsh capital due to impending deals.
