An acute shortage of quality supply is the main challenge to the long-term vitality of the Midlands Engine’s office centres, according to Lambert Smith Hampton. The national property consultancy’s Midlands Engine office market report states that it is up to the property industry, stakeholders and occupiers to take advantage of this lack of quality office space.
Improvements to infrastructure, the loss of obsolete office buildings to alternative uses and an emphasis on inward investment have presented a real opportunity in the Midlands Engine office sector.
Adam Ramshaw, head of Birmingham and East Midlands for Lambert Smith Hampton, explains: “The shock result of the EU Referendum has come at an unhelpful time, but the fundamentals to support development are robust.
“Few occupiers have the luxury of being able to wait 12–24 months to have an office built and we need to provide the buildings that can satisfy immediate requirements so that the economies in our towns and cities can flourish. Where viability is marginal, we need to be seeking innovative ways to ensure much needed development is realised. If we don’t, occupiers will be forced to look elsewhere.”
Birmingham is home to a substantial 0.7m sq ft of speculative development, however, the aggregate total for all the other markets amounts to only 39,000 sq ft across a handful of small schemes.
The dynamics to support development beyond Birmingham are largely in place and there is just over 6m sq ft of known lease events in excess of 5,000 sq ft between 2017 and 2019 in the region, with the quantum of forthcoming lease events running ahead of recent completion rates for the majority of markets.
Adam adds: “Those developers who are willing to grasp the right opportunity and bring forward new stock will be the winners. If the private sector fails to deliver, the public sector can, of course, use its regeneration powers or strength of covenant to drive development forward.”
