Birmingham’s top office rents to reach £34 per sq ft by year end as Grade A supply tightens

16 May 2018

Top office rents in Birmingham could reach £34 per sq ft by the end of 2018, according to international real estate advisor Savills, as prime Grade A availability has continued to fall and now stands at only 153,000 sq ft.

The firm’s latest Market Watch: Birmingham Offices forecasts that full year take up in central Birmingham will total circa 825,000 sq ft, after a first quarter in which it was 14% above the 10-year average at 148,000 sq ft.  Savills highlights WSP’s acquisition of 46,100 sq ft at Brockton Capital’s The Mailbox as the key city centre deal of Q1.

Serviced offices have been the most active business sector in the city centre over the last 18 months, says Savills, with operators acquiring 219,000 sq ft (equating to 18% of the market) during that time.  There also remains strong occupier appetite for refurbished space close to New Street Station at around £23-25 per sq ft, as Birmingham office demand witnesses a ‘flight to connectivity’ and some of the strongest office rental uplift comes from mixed-use schemes.

Ben Thacker, office agency director at Savills Birmingham, comments: “Falling Grade A supply will continue to support the upwards trajectory of top rents throughout this year, until Ballymore’s Three Snowhill and Argent’s Two Chamberlain Square help to ease the supply shortfall in 2019.  Looking further ahead, One Axis Square, 103 Colmore Row and One Centenary Way all have detailed planning permission and could satisfy future requirements towards 2020-22.”

Savills also reports that Birmingham’s office investment volumes reached £169 million in Q1 2018, 71% ahead of the 10-year quarterly average and in part driven by TH Real Estate’s circa £98 million acquisition of 55 Colmore Row.  Overseas buyers have accounted for 44% of office investment in the city since 2016 and prime yields for the best space remain at 4.75%.  The firm expects tightening occupational markets, rising overseas interest and a shortage of openly marketed stock to hold yields firm throughout 2018.

 
 

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Ben Thacker

Ben Thacker

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