There is potential for office demand in Birmingham to exceed 800,000 sq ft per annum over the next decade, according to a new report from independent property consultant GVA.
The Birmingham Future Office Demand report analyses occupiers’ perceived requirement and take-up activity over the next ten years, identifying the key drivers that will affect commercial growth and movement within the market.
Chief among these are lease events, with expiries totalling 3.2 million sq ft for accommodation over 20,000 sq ft due to take place between 2014 and 2026. Of these, a minimum of 65 per cent (2.1 million sq ft) are forecast to relocate to alternative city centre accommodation, with two thirds expected to occur within the Grade A sector.
Charles Toogood, Director, GVA, said: “Over the past five years following the recession, deals have totalled 632,000 sq ft, only slightly below the 20-year average of 645,000 sq ft. This has included substantial inward investment with the likes of Deutsche Bank, the Legal Ombudsman, Vax and the Law Society all completing significant lettings.
“This is a trend that we expect to see continue, with companies looking to recentralise – where occupiers relocate from suburban areas and out-of-town office parks to city centre offices – and decentralise, with rising costs in the South East and London encourage occupiers to look to regional centres to fulfil their back and mid-office requirements.
“We are fully expecting city centre office demand to continue to grow, with a resurgent economy and increasing occupier confidence driving corporate demand. This is particularly true across Birmingham’s financial services, professional services and public sector occupiers, who will continue to drive demand for quality space.
“Coupled with the drive towards more sustainable and efficient buildings, and set against the backdrop of a maturing regional office market that has seen huge swathes of regeneration over the last full cycle, increased levels of take up will become a feature of Birmingham’s central office market.”
While lease events will play a significant role in this surging demand, economic and employment growth, inward investment, corporate activity such as mergers and acquisitions, infrastructure improvements and changes to occupational densities will also have a direct effect.
Charles Toogood continued: “We are anticipating an average growth in employment of around 6 per cent in the region, however occupiers will also be making their space work harder, continuing the recent trend towards lower occupational densities. This means that we will not see a like-for-like growth in employment and level of occupation.
“Birmingham’s office market is continuing to mature, with a significant level of regeneration and development taking place. Infrastructure projects such as the redevelopment of New Street station and the extension of the Midland Metro tram through the city centre are helping to enhance Birmingham’s reputation on both a national and international level as a desirable and viable business destination.”
