Pictured above: Scott Rutherford

Birmingham's office market made a steady recovery during 2010, according to major new research by Cushman & Wakefield.

The firm's influential Office Space Across the World 2011 report shows that last year, rents in Birmingham went up by five per cent, a big improvement on 2009 when they declined by 15 per cent. 

The city is now ranked equal fourth in the UK when it comes to prime office rental levels. The survey reveals that whilst other cities also improved their performance, the picture is by no means uniform.

In fact, the survey suggests that the UK office market is becoming increasingly polarised. After recording the largest rental declines in 2009, London saw a sharp bounce-back in values in 2010 with increases of 25 per cent or more in the West End and City of London. However, some cities outside London haven't performed as strongly. Belfast experienced the largest regional fall in rent (-13 per cent). 

London held its top spot as the most expensive office location in Europe. The West-End sub-market saw a 27 per cent leap in rents, maintaining its position as the second most expensive office location in the world, following a 25 per cent decline in 2009. The City of London experienced a similar uplift (25 per cent), bouncing back from a 16 per cent drop the previous year.

As well as Birmingham, another office market to show an increase in rents was Glasgow (11 per cent), which saw a -8 per cent drop in 2009. As the recovery takes hold, demand for office space from corporates is likely to increase and reduce the supply of space. Office rents were stable in Manchester, as they were the previous year.

Scott Rutherford, head of Cushman & Wakefield's Birmingham office in London, said: "Birmingham has  bounced-back from where it was in 2009, and has regained its position as one of the most popular city for businesses to locate in outside of London.

"That said, we are currently in a situation where we have an over supply of quality space in the city, although it will only take one or two deals to turn this around. How this will reflect in the 2011 survey remains to be seen."

Globally, several office markets around the world experienced sharp increases in rent. After recording the largest rental declines in 2009, Asia saw a sharp bounce-back in values in 2010 with rents in Hong Kong rising by 51 per cent. There was a huge rental boost in Brazil, reflecting the fast recovery of its economy. Rio de Janeiro knocked New York off the top spot in the Americas - the first South American location to do so.

Barrie David of the Cushman & Wakefield Research Group said, "Like the impact of rising food and commodity prices, the higher cost of office accommodation is increasingly a global factor for businesses to consider. However, it is not just a matter of rental growth being pursued by landlords. Tenants also face a cocktail of rising occupancy costs due to inflation-fuelled service charges as well as governmental action pushing up taxation costs in some markets. With these pressures likely to continue until at least the first half of 2011, we expect to see a further increase in occupancy costs."