A lull in commercial office lettings in Birmingham city centre in the third quarter of the year has led to activity in the out-of-town market overtaking it for the first time in a decade.
According to the latest edition of Bilfinger GVA’s quarterly Big Nine report, Birmingham city centre take-up accounted for 95,546 sq ft throughout Q3, while the out-of-town market secured lettings totaling 96, 921 sq ft.
Adrian Griffith, Director at Bilfinger GVA, said: “While it was a relatively quiet Q3 across all markets due to the uncertainty created by Brexit, there have been a number of deals completed over 10,000 sq ft which have helped to boost the out-of-town totals.
“These have included 26,498 sq ft taken at Canmoor’s Birmingham Business Park to a confidential occupier; 10,000 sq ft at IM Properties’ Blythe Valley Park to Hill Hofstetter; and 10,484 sq ft to Taylor Wimpey at Fore Business Park. This is supported by a further 11,952 sq ft let at Papermill Drive in Redditch.
“By the end of the year, it’s likely that we may see out-of-town take-up returning to the 300-350,000 sq ft level, which would put it in line with the 7-year average of 332,000 sq ft.
“Refurbishment of existing stock is helping to drive churn and is paying dividends for those landlords who are investing in their buildings, particularly for occupiers looking for space over 10,000 sq ft which is helping to drive up rents beyond pre-recessionary levels.”
The regional outlook is reflective of the national picture, with uncertainty in the run up to the EU referendum driving down office activity in the nine regional cities covered by the quarterly report by 16% against the five year quarterly average, the lowest quarterly total since 2012.
Nationally, city centre total take-up amounted to 1.06 million sq ft whilst out of town take-up covered 850,000 sq ft, 5% up on the previous quarter, with only Cardiff, Liverpool and Manchester recording above average results.
Carl Potter, Senior Director and National Head of Offices at Bilfinger GVA said: “The recent recovery in sentiment since the Brexit vote is expected to bring an improvement to figures for the final quarter of this year. In addition, the positive effect on headline rents will continue as a consequence of the roll out of the Cabinet office requirements for the Government Property Unit (GPU) across most of the Big Nine cities from H1 2017.”
Despite the market uncertainty fuelled by the referendum, overall rental levels have held up with no drop in headline rents. In fact, the Big Nine average rent is £28.00, up 3.1% since Q3 2015.