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Birmingham Capital Markets: £544M Waiting To Sell, So Maybe We'll Finally Get Some Deals

No 1 Colmore Square, Birmingham

The Birmingham real estate investment scene is far from busy. The stalled £235M sale of Birmingham's Mailbox office and retail scheme seems to say it all.

With uncertain politics and economics, most discretionary buyers and sellers are sitting on their hands, and only a few sales have transacted recently. But take heart. According to Knight Frank, the slightly tumbleweed feel about the market is about to change for the better, with £544M deals now possible.

The Lewis Building, under offer at a quoting price of £136M, and pending deals at The Colmore Building and No 1 Colmore Square, will lift the mood, Knight Frank said.

“With a number of key assets on the market or under offer, investment volumes are set to increase throughout the remainder of the year," Knight Frank Head of Birmingham Ashley Hudson said.

“We have visibility of around £150M of office stock being prepared for the Birmingham market in the remainder of 2019. This is likely to satisfy investors who have shown strong interest in prime office assets across the UK’s major cities over the last year, but who have been thwarted by a lack of stock.”

The short list of transactions in Q1 2019 added up to £295M, 23% below the long-term trend. Deals include NFU's £29.25M purchase of Two Brindleyplace, and a site at Arena Central, earmarked for a 526K SF development, acquired by Kier Property for £30M.

Knight Frank said seven key Birmingham office buildings are on the market:

  • The Colmore Building (Quoting £178M, 5.18% yield)
  • Eleven Brindleyplace (Under offer, quoting £40.3M, 6.5% yield)
  • Bank House (Under offer, quoting circa £20M)
  • No.1 Colmore Square (Quoting £100M, 5.38% yield)
  • The Lewis Building (Under offer, quoting £136.3M, 5.75% yield)
  • 10 Colmore Row / The Great Western Arcade (Quoting £18.4M, 7% yield)
  • 120 Edmund St. (Quoting £51.7M, 5.75% yield)

Knight Frank reports prime office yields in Birmingham at 4.75% and anticipates this level will be maintained for the remainder of 2019.