Office space Birmingham city centre – quarter 3 2012 take-up

Despite a disappointing first half year, quarter 3 transactions for Birmingham office space picked up substantially and, at 171,501 sq ft, were back on track and very representative of a normal quarter. The average size across the 41 office space transactions was also up at 4,183 sq ft, which brings the year-to-date average to over 3,000 sq ft.

The Mott MacDonald transaction of almost 19,000 sq ft of Birmingham office space at 35 Newhall Street was the largest new letting for the year so far – in terms of an occupier moving to a new office building. Both Mott MacDonald and Westlinghouse, the latter acquiring just over 15,000 sq ft at Maple House, had been in the market for an extended period of time, assessing all the opportunities and finally securing their preferred Birmingham office space option on terms that they found attractive.

In addition, there were a number of existing occupiers experiencing growth who acquired additional space within their current office buildings – BPP Training & Consultancy, 21,000 sq ft at 2 Colmore Square and Deutsche Bank, just over 15,000 sq ft at Baskerville House.

Offices in Birmingham city core demonstrating good value

Mott MacDonald’s office relocation was from a relative fringe location on the edge of Birmingham’s Jewellery Quarter to a prime location within the central business district closer to Birmingham’s Colmore Row. This is symptomatic of Birmingham city core office space still demonstrating good value and attracting occupiers looking to move into a prime area.

Birmingham Science Park and Jewellery Quarter offices attracting occupiers

Clearly, the bulk of the Birmingham office space transactions in quarter 3 was in fringe locations. Birmingham Science Park is particularly attractive to start-up organisations and both the Science Park and the Jewellery Quarter continue to attract marketing, creative and digital media industries which remain successful by expanding within their own office accommodation and clustering together. The flurry of office space transactions on Aston Science Park, although individually small, cumulatively makes for interesting reading. The Science Park performs well and attracts new companies to the market, which we hope will continue to expand either at the park or nearby – hence supporting the speculative commercial property development of iCentrum.

Edgbaston office occupiers still migrating into the city core

With the city core still representing good value for money in the refurbished grade A office space sector, this is attracting occupiers from outlying areas into the core, most notably from Edgbaston. Only one office space transaction was completed in Edgbaston, which remains challenging and highly competitive.

Outlook for quarter 4 Birmingham office space take-up

We anticipate quarter 4 continuing the trend of larger office space transactions in Birmingham city centre and providing similar, if not more, office take-up. Firm announcements are due shortly relating to 2 Colmore Square and Brindleyplace where, as a result of office lease expiries, occupiers within the professional services sector are being prompted to acquire office space whilst there are competitive deals and availability. If, as we anticipate, there are further professional service lettings in Birmingham city core and Brindleyplace, occupiers with lease events in 2014-15 may find that the supply of office space that does not already have a competitor within them will be limited. We expect there to be a shortfall in prime stock moving into 2015 and therefore occupiers should be looking now at their future options.

Occupiers still need to plan their office relocation at least 15-18 months in advance

We commented last quarter that occupiers should be looking at their commercial property options 15-18 months in advance of an office lease break or expiry. Occupiers such as Deutsche Bank and Shoosmiths with lease events in 2015 are already actively searching the market for office space. If, as we think will be the case, they conclude their office space transactions before the year end, these and other occupiers with similar lease events could acquire the majority share of existing supply. The supply of prime office space remaining could therefore be limited.

See full details of the transactions for office space in Birmingham city centre and Edgbaston.