New figures show that Birmingham’s booming office market continued its strong performance despite fears of a slowdown caused by the EU Referendum, according to national commercial property consultancy Lambert Smith Hampton.
Birmingham Office Market Forum statistics show that in Q2 lettings totalling 216,000 sq ft were completed – the third highest Q2 total recorded since 2007, said Alex Tross, head of office agency at LSH Birmingham.
This comes on the back of record totals for both Q1 2016 and 2015 as a whole.
“The largest deal was 83,000 sq ft let to Network Rail at Baskerville House, but there were a total of 40 deals. That is significant because the long-term average for deals in a quarter is 33, so there appears to be a much higher than normal level of activity.
He added: “There are many reasons to be cheerful. These results demonstrate that despite there being a slowdown due to people awaiting the results of the EU referendum, it didn’t have the major impact on the market some people had feared – we were still doing deals.
“The outlook is still very positive. The fundamentals of Birmingham as a place to do business are very strong. The fact that we have made huge infrastructure investment, the fact that we are getting large companies committing to moving to the city, and there are some major developments in the pipeline.
“The city is very well placed to ride out whatever medium term impact Brexit might have. We have got all our ducks in a row, including the creation of the West Midlands Combined Authority.”
Alex said a lot of the activity in Birmingham was in the offices of up to 5,000 sq ft. Whilst there may be some impact on the larger, corporate companies, smaller businesses still have lease events, still want value, and it is that market which fuelled that record Q1 and a very good Q2.
LSH recently revealed that the gap between office costs in London and the West Midlands has reached a new high.
The LSH Total Office Cost Survey (TOCS) 2016 reveals the disparity and demonstrated that England’s second city is now more able to attract major investment after years of infrastructure improvements.
The research, published by LSH, showed that Birmingham is 44% cheaper than London and this disparity is expected to encourage increasing numbers of occupiers to look favourably at the West Midlands.
TOCS 2016 shows that the cost of occupying a new-build development in London’s Midtown district now stands at £127 per sq ft per annum, a new high, compared with £71.18 in Birmingham.
“The survey confirmed what we in Birmingham have long known,” said Alex. “The city provides a significant cost saving for those businesses looking to relocate out of the expensive South East but what is key is that the savings do not come at the cost of quality.
“Birmingham benefits from world-class amenities and connectivity as a result of more than £1 billion of infrastructure investment in recent years.
“This commitment to investment means Birmingham is now more compelling as a destination than it has ever been and we have seen the fruits of our labour in the significant increase in inward investment in the city.”
Attracting major businesses such as Deutsche Bank, HS2, Extra Energy and HSBC has been a vital catalyst in the city’s growth, while in 2015, inward investment accounted for 30% of all new leases in the city.