Birmingham has everything to play for in the office market in 2017 and beyond says property expert, Jonathan Carmalt from JLL as it launches its new office outlook report.
The fourth year in succession, the regional office markets experienced a strong level of take-up in 2016, with 7 million sq ft across the core 8, with Bristol and Glasgow leading the way in terms of growth on 2015. Manchester once again recorded the highest annual take-up among the regional cities, with 1.3 million sq ft.
“It has to be said Birmingham, after an exceptional year in 2015, didn’t perform as well in 2016 although still managed to achieve only just below the 10 year average at 700,000 sq ft. However it’s the opportunities we have going forward that will create the catalyst for growth.
“With the legislative hurdle now crossed for HS2, we have a major competitive advantage in the region and share of voice that we need to capitalise on,” says Carmalt.
“We also now have the highest quality new build office space coming forward to accommodate occupiers and much of the tired old space has been or is being refurbished.” he adds.
“After a continued period of declining vacancy, the recent upturn in the development pipeline should help alleviate the scarcity of grade A supply. This reflects a change in mood from investors and a confidence in the city reflected by all the key indicators pointing to record years of take-up to follow.”
Speculative space under construction went up from 283,300 sq ft in Q4 2015 to 1,080,900 sq ft in Q4 2016 in Birmingham as HS2 prompted investors to push the button on prime new office builds, most notably Three Snowhill as one of the largest floor spaces which will be delivered in the city.
A further strengthening of economic indicators in recent months has also reassured corporates and investors, lending an air of cautious optimism to the UK office market.
“Certainty in the economy, politics and business stimulates growth and that is the situation we now have with HS2. We’ve already seen some relocations because HS2 Ltd brought its headquarters here, however, now we expect a wave of further lettings. We’re not just talking to related industries and suppliers, but occupiers attracted to the city’s heightened profile and the quality of life we are able to offer.”
Whilst BREXIT negotiations will garner significant attention during 2017, JLL believes the precise outcome is unlikely to be known for some time and more immediate effects will be felt from the local political climate, with new metro majors soon to be elected.
“These new majors will bring more opportunity for policy to reflect need and development priorities at a local level, together with a strong voice for the region.” says Carmalt.
“We’re already noticeably more visible to government, however a new elected major will bring greater clarity to the West Midlands Combined Authority and Midlands Engine, hopefully helping to push forward further growth.
“Our hope is that this will enable greater joined up thinking and for us the Midland Metro has to be the first priority. Whilst HS2 will help bring businesses to Birmingham, we then have to make sure we have first class connections across the city and region to complete the experience.
“All the signs are positive, however, and I believe we are very well placed to take up many of the large requirements, particularly from the private sector operators looking for the best new base outside of London.”