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Birmingham office market – 2013 take up set to exceed 2012 levels

wantspacegotspace.co.uk - Birmingham office market – 2013 take up set to exceed 2012 levelsThe recent pick-up in enquiries within the Birmingham office market indicates that 2013 take up will exceed 2012 levels, according to new research by BNP Paribas Real Estate, the leading international property adviser. However, it won’t be until 2014 / 2015 that there will be a significant rise in take-up, due to a raft of forthcoming leases that expire at that time.

In 2012, total Birmingham city centre take-up reached 500,955 sq ft, down 25% on the 2011 level of 669,800 sq ft. 2012 saw a slow start to the year, but as it progressed, city centre take-up rose quarter-on-quarter, with Q4 recording the best performance. In H1 2012, there was an absence of larger deals, with only two deals over 10,000 sq ft completing. Positively, the market picked up in H2, with 11 deals of more than 10,000 sq ft completing.

Speaking of the market, BNP Paribas Real Estate’s head of office agency in Birmingham, Carole Taylor, said: “Whilst Birmingham’s 2012 office investment volume of £181 million was disappointing compared with 2011, when £345 million transacted, at a national level it was one of the UK’s better performing cities. Unlike the 2011 volume that got distorted by two very large deals, 2012 showed a balance in lot sizes below £50 million.”

“Looking ahead, investment market transactional volumes are expected to remain subdued, due to the low availability of prime stock to buy. Interestingly, pricing is moving out to a point where good quality secondary investments look comparatively cheap; this will spark interest from investors looking to achieve growth opportunities in the regions. Nonetheless, any decision will be highly calibrated, with tenant security an important factor,” added Taylor

At 2.8m sq ft, Q4 2012 Birmingham office availability was broadly similar to the Q4 2010 and Q4 2011 levels. Whilst the oversupply of second hand space remains problematic for the market, there was some improvement in the city’s grade A supply level and some further space has come through at the beginning of this year with the completion of 2 Snowhill and the refurbishment of 5 Brindley Place. Going forwards, any new office schemes are unlikely without a pre-let in place.

With regards to headline rent, at £27.50 per sq ft it was up 2% on the Q4 2011 level of £27.00 per sq ft. In addition, tenant incentives are set to remain favourable with tenants expecting to negotiate a minimum of 12 months rent-free on each five-year term certain.

Posted by The Editor (wantspacegotspace) on 13th April 2013 (updated 15/04/2013)

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