Birmingham office market back on track to hit pre-recession record rents
The Birmingham city centre office market recovered in the first quarter of 2017 back to normal Q1 levels, with headline rents on the best quality, new Grade ‘A’ office space set to hit the pre-2008 recession high of £33 per sq ft.
Nigel Tripp, Director of KWB, says that with office space transactions in the first quarter of 2017 totalling 139,000 sq ft – more than 30,000 sq ft over total transactions in each of the third and final quarters of 2016 – the second half of 2016 is rapidly becoming a blip in the Birmingham city centre office market rather than the beginning of a downward trend.
He says: “The first quarter of 2017 was very much on a par with that of 2015. It was Q1 2016 with its large lettings to PWC, Pinsent Masons and DAC Beachcroft that was unusual.
“The rest of 2017 looks set fair, so even with the highest level of office development underway in Birmingham city centre for 15 years (1.4 million sq ft), we should see top quality Grade ‘A’ space match the record pre-recession rents of £33 per sq ft, as we anticipate some significant office lettings in the coming months. The much reported HMRC requirement will see a letting of 200,000-300,000 sq ft and we also expect the HS2 halo effect to strengthen the Birmingham city centre office market.
“We’ve also seen several investment purchases, including that of Brindleyplace offices by HSBC Alternative Investments, with HSBC themselves being set to move into adjacent HQ offices at Two Arena Central, currently under construction.”
According to KWB’s analysis of Q1 Birmingham office market, the average transaction size was around 4,500 sq ft.
Nigel Tripp continues: “With HS2, we are going to see even more demand for offices of under 5,000 sq ft, as more professional advisers look to take office space in the city. There is also still a strong demand for small offices for sale in Birmingham city centre (such as 50-54 St Pauls Square, pictured right) among business owners looking to take advantage of the tax benefits of Self Invested Pension Schemes and Small Self-Administered Schemes (SSAS), historically low interest rates, and banks’ willingness to lend.”
Each quarter KWB produces an overview of Birmingham office market transactions. For more information on these and other Birmingham office market research, please contact Nigel Tripp on 0121 212 5981 or email ntripp@kwboffice.com.
