Prime office rents in Birmingham are finally poised to move off their £28.50 flat-line according to experts at CBRE.
Research from the property consultancy shows that headline rents in the city have been constant since December 2010.
But Ashley Hancox, a senior director in CBRE’s offices team, says this period of inertia is set to change, with a £30 psf headline now a realistic proposition.
Birmingham is not the only regional office market to have seen nil or slight growth in rents over the last few years as oversupply is eroded at a varying pace across the UK.
Rents in Bristol have remained static at £27.50 per sq ft since June 2007, , making the capital of the South West the regional office market’s biggest non-mover. in Glasgow office rents have been stuck at £27 per sq ft ever since.
Elsewhere, however, regional rents have been moving in a northerly direction. In Aberdeen, rents have been positively striding ahead. The Granite City has added £10 psf to its prime rents since the start of the recession; they are now at £31.50 per sq ft, the highest regional rent in the UK. This is largely built on the growth of the energy and sustainability markets.
In Manchester, rents have continued their steady growth, moving from £29.50 to £30 in March last year. More recently, Leeds put on a pound: the city finished 2012 at £24 per sq ft, but rents have been £25 per sq ft for the last year. In June last year rents in Edinburgh jumped from £27 per sq ft, where they had lingered since March 2011, to £28; by the end of December 2013 they had risen to £28.50 per sq ft.
Ashley said: “As far as Birmingham is concerned, we are looking at the imminent prospect of rental growth.
“Our historical data shows that rents in Birmingham have peaked, then dropped, then surged back above previous peak levels as a result of a severe shortage of Grade A choice, which is now a very real prospect in the city.
“The pre-recession peak of £32+ is probably artificially high: it was achieved on just two developments – Two Snowhill and Colmore Plaza. But in my view the £30 threshold is now within easy reach.
“Landlords have begun to take a harder line: with prime stock depleting they are in a much stronger position and confident enough to reduce incentives. It’s inevitable that rental increases will follow. Tenants with a lease event today will struggle to strike a deal on their own terms and in some cases may be challenged to find more than one or two suitable options.”
