Birmingham office market showed encouraging signs of improvement in 2010

Colliers International report records highest level of annual office space take up since 2005

Article posted: 15 Feb 2011

According to a report out this month by property experts Colliers International, Birmingham office market showed encouraging signs of improvement during 2010. Net stock absorption was positive for the third half year period in succession with total occupancy increasing by 221,825 sq ft over the course of the year. This is the highest annual total of take-up of office space in Birmingham since Colliers International began recording absorption levels in 2005.

Grade A take-up in central Birmingham has increased by 50% year on year in line with improving absorption levels and total take-up accounted for 611,404 sq ft in 2010 compared to 455,908 sq ft in 2009.

End of year availability was down by 7% on Q4 2009 and the overall vacancy rate of 18.4% was the lowest for two years. With no further schemes set to complete over the next 18 months, Colliers anticipate further sharp falls in availability during the course of 2011.

The completion of the Birmingham Development Company’s Mailbox scheme (pictured) signals the end of current speculative development within Birmingham city centre. Accordingly, Colliers expect absorption rates to accelerate as Grade A shortages become more pronounced over the next 12 months.

While prime rents remain at £27.50 psf, the continuing reduction in Grade A offering is set to have a positive impact upon rental levels during 2011. Occupiers are beginning to soak up existing quality stock at the likes of 11 Brindleyplace and 45 Church Street. Equally, with the release of BT’s space at 5 Brindleyplace, there is top quality product in key locations that is capable of driving rental growth.

Grade A occupation levels have risen by 25% in 18 months and there is expectation of further positive absorption in H1 2011. While availability within the Birmingham core fell by only 3% during the course of 2010 and overall occupation levels remained flat, Grade A availability was down by 14% over the same period. With the release of 120,000 sq ft at 5 Brindleyplace, the City Core will not see any further Grade A product forthcoming in 2011 so choices for occupiers seeking large floorplates of 20,000 sq ft and above are limited.

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Posted by Janet