Paul Bassi, chief executive at AIM-listed West Midlands property group Real Estate Investors plc, has revealed the company is particularly interested in turning Listed buildings into Grade A space.
He pinpointed ones up to 20,000 sq ft with floor plates of 2,500-5,000 sq ft, citing Cathedral Place, REI’s niche office development right at the heart of the Birmingham’s Central Business District, as an example.
The problem is identifying sites.
“We want do this in an on-going long term programme whenever we can find the right opportunity,” said Mr Bassi.
“We are talking niche Grade A space but in the Birmingham city core only – so in and around Colmore Row … prime addresses. And we are especially interested in Listed buildings because when unoccupied they are free of burdensome empty property rates.”
Mr Bassi said in the current climate it was difficult to pick up suitable properties while confidence remained fragile. “We know there is demand there, we know people appreciate the need to change, but it is hard to persuade them to take the plunge.”
Rents achievable for small amounts of grade A space were running at £20-£25 per sq ft against £25-35 psf previously.
But there was a definite market including the professional sector, firms moving into the region, and those expanding/relocating out of inferior space to take advantage of rent free periods and incentives whilst market demand was weak.
Occupiers got a good deal for upgraded premises and a prestige location.
But occupiers should first make sure they know what they require, according to Ian Clark, Senior Asset Manager at REI.
He warned: “They should focus on what they need; not necessarily what the market tells them that they need.”
Mr Clark said Birmingham had a lot going for it – New Street Gateway; John Lewis; Airport runway expansion; the Metro extension; Enterprise Zones and the prospective re-development of Paradise Forum.
But he pointed out: “In the first half of 2012, office take-up was predominantly made up of lettings between 3,000 and 4,000 sq ft.
“While it is great to shout about the big developments, the majority of the deals are in this bracket and focussing on the ‘big ticket’ schemes can sometimes divert attention away from the heart of the matter.
“REI will look at flexible shorter term leases with occupiers to help them re-locate or expand in an uncertain economic climate. We have a wide range of property, from out of town locations to the likes of Cathedral Place.”
Colmore Row, he noted, was still seen as the key location within the Central Business District.