Birmingham office supply crisis looming, says Colliers
Interest in office stock in Birmingham is the highest it has been for five years, fuelling fears of a looming supply crisis. According to Colliers International’s newly released net stock absorption survey, the city’s vacancy rate stands at 18.4 per cent – the lowest for two years.
Total occupancy across central Birmingham rose by 221,825 sq ft during 2010. The city has been in receipt of significant growth over the last decade; 5.1 million sq ft of space was added between 2000-2012, compared to 3.9 million sq ft in the ‘80s and ‘90s combined.
According to Craig Satchwell, a director and head of the office agency team at Colliers International’s Birmingham office, the completion of the city’s Cub development signals the end of the current speculative development cycle, with no new offices currently being built.
Satchwell said: “For the short-medium term, with the exception of Two Snowhill, there are few, if any, deliverable new build schemes in the central office core.
“In the absence of funding for speculative office development landlords and developers need to look at opportunities to recycle existing stock to accommodate new inward investors to the city. However, given the limited pool of opportunities, this can only be a short-term solution.”
However, with Grade A shortages becoming more pronounced, rent rises over the next 24 months are inevitable, added Satchwell. Colliers predicted that rental growth will return in 2012, with prime rents potentially reaching £30 per sq ft by 2013.
