Lack of Grade A office supply in the Birmingham out-of-town office market will result in an increase in speculative development over the next 12 months, according to the latest research from real estate consultancy, Colliers International.
Colliers’ latest Birmingham Office Market Snapshot shows that strong office demand in the out-of-town office market in previous years has reduced availability by 60% since 2011, with take-up for the first half of 2018 reaching 146,337 sq ft, 12% higher than in the previous year.
“This strong office demand has put downward pressure on vacancy rates to just under 8.9%,” said Douglas Bonham, Director in National Offices at Colliers International in Birmingham. “In the face of limited Grade A stock, new build developments are now being considered instead of refurbishing the existing space, as we’ve seen with the recently completed speculative unit at Blythe Valley Business Park.”
Solihull still presents a rental discount in comparison to Birmingham city centre, however Colliers report predicts that rents will continue to rise over the next 12 months from the recently achieved record £25 per sq ft for Grade A space and £16.50 per sq ft for secondary accommodation.
Douglas continued: “The Birmingham out-of-town office market is likely to attract further HS2-related demand as ‘north-shoring’ firms seek to take advantage of cost-efficiencies in the area. Forthcoming lease events, when occupiers begin reviewing alternatives for office space, are also expected to boost take-up in the remainder of the year. The availability of high quality stock will prove crucial to satisfying the ongoing desire for offices in the area, however it must be noted that the limited availability of land for speculative development may hinder how much of this demand can be met.”