Companies looking to relocate or expand their office space in Birmingham are being forced to act quickly, as the amount of top grade office space has hit a five year low in the Midlands city.
A survey by property specialists Colliers International has revealed that four consecutive years of attrition have left prospective tenants with only 891,000 sq ft on the market to choose from at any given time.
Just 600,000 sq ft of Grade A office accommodation remains to be filled in the city centre, which is a lower amount than before the worldwide financial crisis began to take its toll in 2008.
This, of course, could prove to be a problem with companies beginning to take an interest in Birmingham thanks to the combined factors of the city centre Enterprise Zone and the proposed HS2 rail link.
Associate director of the office agency team at Colliers’ Birmingham branch, Alex Tross, believes that the problem of too little top class office space will only increase in the coming months.
He says; “It’s no secret that there are major outstanding enquiries in the financial services, insurance and legal sectors.
“We anticipate that these will be fulfilled inside six months, potentially wiping 200,000 sq ft off stock levels.
“Demand for Grade A space eclipses demand for all other grades of stock – this trend has continued in the recessionary years and the appetite for occupiers to improve their accommodation is unabated, despite pressure on overhead costs.”
With government investment into Birmingham continuing by way of the Enterprise Zone, this puts the council under pressure to begin encouraging developers to boost the total amount of office space dedicated to Grade A accommodation.
Should space continue to deplete on an almost monthly basis, rents will of course be pushed up and this in turn will make it less cost effective for international businesses to base themselves in the city.
As Mr Tross points out, occupiers have now begun to realise the scope of the problem and as such are snapping up prime locations by binding themselves into longer term contracts. In fact, law firm Shoosmiths has taken out a 40,000 sq ft office space at Two Colmore Square despite the fact it has two years remaining on its current lease.
Mr Tross concludes; “It’s now dawning on occupiers that it won’t be long before their choice is truncated, and whatever’s out there will be prohibitively priced.”
Do you think it is the responsibility of the city council to put in place incentives for developers to create a larger amount of Grade A office space, or should part of the grant given to the Enterprise Zone be channelled into this area?
