A lack of quality space in the development pipeline is leading to a supply problem for city centre grade A offices according to new research from national commercial property firm Lambert Smith Hampton (LSH).
LSH’s latest Midlands Office Market Report confirms fears that Nottingham, along with other cities in the Midlands region, is starting to face a shortage of Grade A office space as demand outstrips supply. Whist take-up has faltered over recent months, the underlying trend demonstrates stable demand levels and supply of prime space 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, but much of the space available is of inferior quality and this could hamper future activity in the region.
Phil Quiggin, Director in the Nottingham office of LSH said, “The office sector in the region has undoubtedly felt the impact of difficult market conditions over the last two to three years and whilst second-hand rents have fallen significantly, prime rents have held up relatively well and actually shown a small increase in the case of Miller Birch’s pre-let to Eon on Burton Street, Nottingham. However, most space available is second-hand space and much of it is inferior and incapable of meeting modern occupier requirements.”
He added, “Understandably, we’ve seen a limited appetite for speculative development, and new-build schemes are unlikely to get off the ground without pre-lets in place. This means higher demand for second-hand space, but there is an added supply problem with much of the space being outdated or unfit for purpose.”
“There is a need for landlords to look at comprehensive refurbishment options if they are to attract occupiers who have been unable to find suitable Grade A or Grade B space.”
