The third quarter of the year has been a busy one for Birmingham’s office market, with 402,000 sq ft of deals completed making it the strongest period for two years.
While the Government’s commitment to the 240,000 sq ft, 3 Arena Central represents the largest single transaction, activity has been diverse.
According to the latest edition of GVA’s quarterly Big Nine research, the city recorded six medium-sized deals over 10,000 sq ft and continued to experience interest from the serviced office market, with Instant Offices completing three deals totalling 40,000 sq ft on Cornwall Street in the city core.
Birmingham remains a key focus for inward investment, with lawyers Hogan Lovells taking 23,400 sq ft at Ashby Capital’s Colmore Building and recruitment firm Allegis committing to 7,500 sq ft at CEG’s Alpha Tower – both fulfilling regional expansion requirements from London.
Further underscoring the current rush of activity, IM Properties’ recently redeveloped 55 Colmore Row has set a headline rent of £32.50 psf, a peak not seen since the pre-recessionary period and one that GVA anticipates may increase.
George Jennings from GVA’s offices team, said: “This year continues to offer some interesting opportunities for the city, with requirement from HS2-affiliated companies driving strong interest in the serviced office market.
“The Government’s commitment to create a new hub for HMRC and the Department for Work and Pensions at Arena Central and inward investment from the professional services sector demonstrates how Birmingham continues to be seen as an appealing destination for inward investment.
“With a minimum of 150,000 sq ft of deals to complete in the last quarter of the year, total take-up for 2017 is likely to reach and in all probability exceed 800,000 sq ft, making it the third best year for the city on record.”
George Jennings continued: “At the moment there’s just over 300,000 sq ft of immediately available new Grade A stock, representing around one year’s supply. A further 600,000 sq ft being developed speculatively at 1 and 2 Chamberlain Square and Snowhill, which will bring a further two years’ supply when these schemes complete in 2019.”
Commenting on the report, Carl Potter GVA’s Carl Potter says: “With the GPU deals providing such a boost to activity, it does beg the question how the rest of the market is performing.
“Underlying demand is proving to be robust, especially in the city centres, although we are also seeing some caution with an increased number of lease regears compared to recent years. Overall take-up this quarter (including the GPU deals) is 58% above average, while if we exclude them it is 4% above average.”