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Birmingham Office Market Review

Birmingham Office Market Review

  • A current lack of supply of Grade A offices in Birmingham.
  • Prime headline rents at £32psf for Grade A offices in Birmingham.
  • Rental growth for Birmingham offices is anticipated to increase due to shortages in Grade A office space and improved office refurbishments.
  • At present, a strong demand from occupiers for offices in Birmingham; London based occupiers are seeking to reduce property costs via relocating their back-office functions to regional cities with large pools of talent such as Birmingham. Such examples include Deutsche Bank and HSBC.
  • Current office yield of 5.25%; this figure is expected to remain stable as a result of the EU referendum and its associated uncertainty. However, several economic challenges may affect office yields in the form of rising inflation and weakening of the British Sterling Pound (which has led to higher import costs). The combination of both will further reduce profit margins and discourages commercial office developers from creating new offices in Birmingham.
  • Office based employment is rising in UK regional cities such as Birmingham. Administrative and tech-based employment are leading this established trend. However, engineering firms are seeking office space in anticipation of the high speed two rail line (HS2) which will further increase office-based employment and its associated rental rates.
  • In terms of regional office investment, 39% of investors were from overseas for 2016.

 

Sources of Information:

  1. http://www.savills.co.uk/research_articles/173549/216091-0
  2. https://kfcontent.blob.core.windows.net/research/1221/documents/en/2017-4472.pdf
  3. http://www.gva.co.uk/uploadedfiles/GVA_UK_Research/2017%20Real%20Estate%20contributing%20to%20growth%20in%20the%20West%20Midlands%20Autumn%202017.pdf
  4. http://www.colliers.com/-/media/files/emea/uk/research/offices/201707-birminghamofficessnapshotq22017.pdf?la=en-GB

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