As Birmingham continues to flourish as a prime destination for both new and established businesses, office market transactions have climbed to a level not seen since the onset of the economic crisis in 2008, with property experts in the West Midlands forecasting further gains for landlords in the coming year.
Thanks to an exceptionally strong fourth quarter, Birmingham annual office lettings reached 713,460 sq ft in 2014, with the HS2 deal’s uptake of 97,958 sq ft at Two Snowhill contributing strongly to the overall total.
The quarter’s 341,164 sq ft take up figure almost equalled the 372,296 sq f sum achieved in the first nine months, putting paid to the theory that demand within the market would tail off as the year drew to a close.
2014’s achievement is much stronger than the 664,147 sq ft let during 2013, and considerably better than the 500,955 sq ft of office space let during the previous year. Furthermore, as the number of deals rose from 128 in 2013 to 148 in 2014, there is a high chance that uptake will continue to climb as 2015 progresses.
In further good news, it seems that the increasing demand for high spec office space in the city centre will push up rents across Birmingham’s most popular business destinations. Experts from Knight Frank forecast that rents within the office market will climb by around 5 per cent this year, reaching a seven year high of £31 per square foot by the end of 2015.
Head of Knight Frank’s Birmingham office, Ashley Hudson, believes that the low level of speculative development in the city at present will benefit existing landlords of high quality office space.
He says; “There is a continued lack of supply of brand new grade A space in Birmingham’s core and this is resulting in a tightening of the market at all levels and pressure on existing rental levels.
“A couple of schemes such as 103 Colmore Row, which Knight Frank has just acquired for Sterling PV and Rockspring, will commence on site this year and we anticipate strong pre-let interest from existing major Birmingham occupiers and inward investors.
“The quality of this 220,000 sq ft development and its unrivalled prime location will drive rental growth in the City at the very highest level and this will filter down through the second hand market also.”
However, it is not only Birmingham predicted to benefit from this trend as a low supply of grade A office space is forecast to push up rents throughout many major city centres in the UK.
The demand for space by expanding companies is also predicted to have a beneficial impact upon vacancy rates in areas such as Manchester and Newcastle.
Commercial research associate at Knight Frank, Louisa Rickard, concludes; “As economic growth spreads to the regions we expect to see prime office rents rise across regional city centres in 2015.
“Lack of supply at the prime end of the market will add further upward pressure on both prime and secondary rental growth.”
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