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William Ventham, associate director in CBRE’s office agency team, ponders Birmingham’s office take up for 2011 with a sense of déjà vu.

William Ventham, associate director in CBRE’s office agency teamAt 669,798 sq ft Birmingham’s office market take up for 2011 pretty much matched the previous year’s figure of 668,392 sq ft. One deal, which exchanged in late December, undoubtedly ensured that this was the case. The Law Society’s 57,291 sq ft letting at the Cube proved to be the biggest in 2011.

Take-up was loaded towards the back end of the year. In the run-up to the festive season there were three deals which, combined, totaled more than 110,000 sq ft, at Colmore Plaza (Grant Thornton), Colmore Gate (De Vere Group) and The Cube. These ensured that Birmingham’s agents had a happier Christmas, as well as proving crucial to the final figures.

Over the last three years take-up has plateaued. The number of deals concluded last year – 140 – is also on a par with 2010’s 141, demonstrating an ongoing trend towards smaller lettings, a pattern matched in other regional cities.

Overall, the year was dominated by the secondhand market. Grade A take-up reduced to 30 per cent in 2011, compared to an average 50 per cent in the five years prior. However, the number of deals in excess of 20,000 sq ft is on the rise – there were ten this year, compared to just three in 2010. This is encouraging, as it demonstrates that larger occupiers are finally starting to bite the bullet and commit to taking space.

In 2010, take-up was dominated by occupiers from the training sector. Thankfully, 2011 has seen more of a spread. The financial services sector has shown signs of revival, with significant lettings to Grant Thornton and Deutsche Bank; Network Rail was particularly active, while the Ministry of Justice’s 38,398 sq ft letting cements Birmingham as a major legal centre. Vacuum maker Vax is also a newcomer to the city.

The level of take-up has made a significant dent in the city’s Grade A stock. With funding still scarce and confidence remaining low, none of this has been replenished.

Newly constructed or back-to-frame Grade A stock is currently circa 600,000 sq ft, compared to just under 1m sq ft at the start of 2011.

In the short term this is unlikely to change: there’s just one Grade A scheme currently on site - Hines/Ballymore’s Two Snowhill, which completes early in 2013. There is no other speculative new build opportunity capable of completion before 2015.

Beyond then, Arena Central, 55 Colmore Row and Paradise Forum look poised to finally come off the drawing board. By then, there should be pent-up demand for the space on offer, in line with improved economic conditions and the fruition of a number of key infrastructure improvements.

Posted by Michael Gillespie (wantspacegotspace Limited) on 24th January 2012 (updated 09/04/2013)

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