Birmingham recorded the highest take-up of commercial office space of any of the UK’s nine largest regional cities in the last three months of 2017, almost doubling the five year quarterly average.
The city centre saw 354,530 sq ft of space transacted in the final quarter of 2017, an 83% increase against the five year average for the same period of 193,694 sq ft.
The activity included law firm PwC’s commitment to pre-let the 58,680 sq ft balance of One Chamberlain Square, the first building at the Paradise redevelopment, following their initial commitment to 90,000 sq ft.
The largest deal of the quarter was to serviced offices operator, Regus, which pre-let the full 76,000 Crossway, part of AG Dunedin’s Great Charles Street Estate.
Charles Toogood, GVA, said: “The letting to Regus in particular is a strong reflection of the important role that the serviced office and co-working sectors are currently playing in the office market. Nationally, operators in these areas have secured in the region of 635,000 sq ft, 32% of which has been in Birmingham.
“There remains limited immediate availability of good quality stock, which has been reflected in the slight upwards movement of rents, with Net effective rents now averaging £26.40 per sq ft, up from £26.00 at the end of the third quarter of 2017.
“Looking forward, large-scale developments like Paradise, New Garden Square and Arena Central will continue to act as magnets for inward investment, while refurbishment of existing stock should be able to satisfy at least some requirements from businesses looking to relocate within the city.”
Overall, 2017 represented a record-breaking year for the Birmingham offices market, with transactions totalling over 1 million sq ft for the first time.
This is a reflection of the wider national picture, with take-up across the nine regional cities covered by the report totalling in excess of 10 million sq ft, ahead of the previous high of 9.5 million sq ft recorded at the peak of the market in 2015.
Carl Potter, GVA, said: “2017 was a record year for the Big Nine regional markets, supported by the increasing demand for places where people can work, stay and play. Lettings to the GPU and the rest of the public sector provide a foundation to employment, contributing a critical mass to placemaking schemes that are increasingly retaining talent and reinvigorating the city centres.
“Simultaneously, the rise of flexible office space delivers a significant level of square footage that attracts a diverse workforce and range of occupiers that look for value outside London. Looking ahead to 2018, we expect deals to the public sector and co-working office space to continue to outperform. There are still GPU deals to complete in the first phase and the recent industrial strategy has committed to further phases and more jobs moving from London.”
Published quarterly, the Big Nine analyses office letting activity across nine key regional cities: Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle.
