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Charles Warrack gives his view on the Birmingham Office Market

wantspacegotspace.co.uk - Charles Warrack gives his view on the Birmingham Office MarketFor the first three quarters of 2012, the headlines relating to the take-up of office accommodation in Birmingham have been stark.  

Taking into account where we are in the economic cycle and the raw economic headlines that are appearing on a daily basis, some might argue that the current position and short term outlook is fairly gloomy, albeit that the third quarter (Q3) should take the UK out of recession. No surprises there!

Contrary to the above, I strongly believe that we are now in the initial phase of a genuine upturn. I will explain why.

Whilst the current level of take-up for 2012 (the first three quarters) currently standing at circa 320,000 sq ft is significantly below the five year average of circa 675,000 sq ft per annum take-up, it can be clearly argued that because the average length of an office transaction is nine months from start to finish, the take-up figures that we are seeing today are actually reflective of the market as it was 9-12 months ago. I call this ‘transaction lag’.

I therefore believe that the true state of the current office market in Birmingham will be reflected in about a year’s time.  Furthermore, whilst there was an extremely slow start to Q1 and 2 in 2012 where the take-up was 54,573 sq ft and 93,081 sq ft respectively, there was a marked improvement in Q3 of 171,501 sq ft.  If this is continued into Q4, there is then a strong argument to say that the upturn has started, although I admit it is likely to be a slow rebuilding process.

Speaking from my own personal experience and that of my contemporaries in the market place, there is a fair amount of activity beyond what appears to be the calm surface of the mill pond.

I myself have just been involved in one of the largest office transactions in the year (30,000 sq ft) in the Midlands and am currently advising a number of occupiers who are likely to relocate to bigger and better premises within the next 12 months.

In addition, on the disposal side, we are seeing a resurgence occupier interest and expect that within the next 3-6 months some significant transactions are due to be undertaken.  

Obviously, the last 4-5 years have been very bruising for the UK generally and on a worldwide basis.  We are all having to adjust to a new norm but when one actually analyses what is said in the media, whilst clearly there are some concerning new stories about the condition of the economy, there are also positive headlines that one can point to.

As a recent former Prime Minster was on record as saying, “one can clearly see that there are green shoots of recovery sprouting”.

So where does all this leave us?

Clearly there is a lot of hard work to be done in the next few years in order to get the economy in general and specifically the property market moving a bit quicker (clearly the banks have a big role to play in this).  

My advice to occupiers is that whilst it is still very much a buyers market, the tide is slowly turning and certainly from our own recent experience of acting for occupiers, one needs to be savvy in this market in order to get the best deals.  It is therefore very important for occupiers to seek the advice of an agent when acquiring a property whether on leasehold or freehold terms in order to ensure that the pitfalls are avoided and as sure as eggs are eggs, that the fee that an occupier will pay an agent for this service will be more than covered by the savings that can be made.

Property by its very nature is illiquid and can, sometimes, be a complicated business with pitfalls and trap doors. The services of a good agent will ensure that the occupier avoids these and gets the best possible value for his money.

The last four or five years have been a good lesson for us all but let’s not forget that green shoots are appearing and also we need to give ourselves collectively a pat on the back as a nation for the superb summer Olympics.

Posted by The Editor (wantspacegotspace) on 30th October 2012

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