Pictured above: Scott Rutherford
Birmingham will face a major shortage of office space at the top
end of the market, according to new research by Cushman &
Wakefield.
Scott Rutherford, who heads the firm's Birmingham office, said
that the latest figures on supply, take-up, demand and prime rents
in its quarter one 'Business Briefing' survey revealed that despite
the continuing economic downturn, the best quality space had
continued to move.
As a result, there is now just 700,000 sq ft of 'Grade A' space
left in the city centre, with no more in the current development
pipeline, a situation caused by the impact of the recession on the
availability of finance.
Mr Rutherford said: "We believe that tenants will soon be
disappointed in their ability to dictate terms to the same degree
and select their first choice accommodation.
"We foresee in the short term a lack of supply of large
floorplates starting to emerge, and the choice for occupiers
diminishing.
Despite the recovery at the top end, the lack of activity where
less desirable office space was concerned has left the market
overall rather flat, he added.
"With much speculation over the signs of recovery creeping into
the market, the real estate position in Birmingham specifically in
the first quarter of 2011 was disappointing," he said.
"The central Birmingham office market was 7.4 per cent down on
the five year average in terms of the number of deals done," he
said.
"At 101,565 sq ft this was the lowest quarter one return in the
last five years, down from a peak of 183,348 sq ft in 2010."
Mr Rutherford added that despite this, the market had witnessed
some 'green shoots' in the form of two minor deals involving the
financial services sector.
These were bankers Coutts and Handelsbanken taking up offices in
the city centre, the first involving financial services businesses
since Barclays moved to One Snowhill in 2008.
In terms of demand, the 'Business Briefing' research showed that
there was little activity in the city centre, although the out of
town markets were witnessing some active requirements.
Mr Rutherford said: "The number of new serious enquiries is
still limited, and existing larger enquiries are still slow
moving.
"Locally, the market is very much driven by lease events and
many occupiers continue to regear their leases with existing
landlords."
Rents in the city centre and throughout the region remained
stable, and are expected to remain this way for the next six
months.
For most areas, though, the last peak rent was seen in 2008 and
Mr Rutherford said: "It remains an occupiers' market for the time
being, with landlords competing via sizeable incentive packages to
attract new occupiers or keep existing tenants."