Office landlords in Birmingham should upgrade their property now, or risk losing out as tenants look for high quality second-hand accommodation according to experts at national commercial property firm Lambert Smith Hampton (LSH).
LSH’s latest Midlands Office Market Report says that prime Grade A space in the city centre will almost completely disappear as take-up outstrips supply. This will mean potential tenants, lured by the city’s Enterprise Zone status, will be looking for high quality, well-maintained second-hand space.
But the winners in the race will be landlords who have invested in upgrades for their offices, while those who have held back will be left with falling occupation rates and a struggle to find tenants.
The LSH report confirms fears that the city will face a shortage of Grade A office space in the coming years as demand outstrips supply. Although take-up has decreased slightly over the last year, supply is unlikely to be able to keep up, with very little new development in the pipeline. The result will be higher demand for good quality second-hand space, a trend which is already developing.
Ian Kibble, Regional Director of the Birmingham office of LSH said, “In a competitive market, second-hand buildings with high utility bills and noisy, inefficient cooling systems are a massive turn-off for prospective tenants. The modern occupier has requirements that original 1980s and 1990s stock simply won’t meet. The modern office must be capable of meeting the new workplace agenda, including demand for flexible working practices such hot-desking, break-out areas and large floor plates to encourage working collaboration.
“Technological advances, such as the introduction of energy-efficient heating, ventilation and air-conditioning systems are now a standard requirement. Basic refurbishment is no longer sufficient to secure the elusive tenant.”
He added, “Now more than ever landlords need to exceed occupier expectations in order to differentiate them from the competition. If successful, the result of such a comprehensive project is a product which not only provides modern, high quality office accommodation, but also increases the rental and capital value of the space. Coupled with this, there are cost-reduction and operational efficiency benefits that can be shared with the client.”
