Birmingham office rents to climb – Colliers CRE
Colliers CRE expects headline rents over the next three years for office space in central Birmingham to rise significantly, reaching £31.00 per sq ft by 2013. In its latest update on the market for office property in the centre of Birmingham, the firm notes that prime rents are currently £27.50 per sq ft, down 8.3% year-on-year, but says that the lack of development in the pipeline and expected shortages in available Grade A space will drive rents sharply higher over the next couple of years, starting in early 2011 and achieving growth of 8%-10% in 2012.
Occupiers in central Birmingham demonstrated growing confidence during the first half of 2010, Colliers CRE says, as net stock absorption remained positive during the period. The firm expects continued healthy levels of absorption up to 2013. The sharp rise in Grade A take-up during the first half was accompanied by a strong increase in demand for high-quality space, it adds.
“Occupiers within Birmingham have benefited from a greater choice of quality product, although with a lack of new space coming to market over the next two years, Grade A options will begin to shrink as occupational costs start to rise once more. While the current Grade A occupation rate stands at just under 80%, we would anticipate that level rising markedly over the next 18 months, set to peak at over 95% in 2012,” Colliers CRE says.
The firm expects to see more refurbishment programmes taking place, as developers are still struggling to obtain funding for projects. In particular, it thinks occupiers seeking medium-term options for relocation or overspill space may be attracted to cost-conscious upgrading of centrally located Grade B units. However, it cautions that financing remains difficult, even for modest refurbishment opportunities.
