The commercial property market in Birmingham saw a slow end to 2016, but a positive first six months have mitigated the effects, bringing annual take-up figures close to the five year averages.
While some 97,391 sq ft of transactions were completed in the city centre in the last quarter of the year the figures, which come from real estate adviser GVA’s quarterly Big Nine report, are a lull rather than an indication of diminishing interest in the market. In fact, there were 693.000 sq ft of transactions completed across the year as a whole, just 10,000 sq ft shy of the five year national average.
The professional services sector was a key driver, with a number of significant transactions including DAC Beechcroft’s 40,000 sq ft letting at Tricorn House, Pinsent Mason’s 40,000 sq ft commitment at 55 Colmore Row, and PwC’s 90,000 sq ft pre-let at 1 Chamberlain Square, part of the Paradise redevelopment.
Charles Toogood, Senior Director in the Midlands office, said: “Taken in isolation, these figures may look unimpressive, however in reality 2016 has been a good year, with a strong first six months producing significant levels of activity in the city centre market.
“The slowdown in transactional activity is endemic of the wider national picture following the EU referendum vote in June. However there have been a significant number of conversations ongoing in the background throughout 2016. While these deals didn’t complete by the end of December, we’re anticipating activity in excess of 900,000 sq ft to be completed this year.
“This include the Government’s requirement for 240,000 sq ft of space in the city as part of its ongoing estate consolidation strategy, some 25,000 sq ft for Arcadis, 13,000 sq ft for Beazley Insurance, and a number of live demands from serviced office operators.
“Combined with up to 150,000 sq ft of requirement from HS2, both in terms of direct demand and via contractors actively looking to acquire space following Royal Assent, this paints a very positive picture for the city in the coming year.”
Published quarterly, the Big Nine report compares commercial activity in the UK’s largest regional cities.
Nationally, professional services sectors were the most active during 2016, making up 27% of all deals over 5,000 sq ft, while financial services made up 19%, with insurance and asset management being particularly strong. The recent strong growth seen in the TMT sector was not sustained during 2016, accounting for 10% of deals, compared to a five year average of 16%.