Aviva Investors has sold Colmore Gate for a sum £4.5M above the asking price as investors jostle for Birmingham office refurbishment opportunities.

A series of lettings, and a gaping hole in the supply of good refurbished office space, has boosted investor confidence in the central Birmingham office scene.

The 172K SF block at Colmore Gate has been sold by Aviva Investors to Ashtrom Properties UK for £39.5M. The asking price reported in May 2021 was £35M.

The landmark block was 60% unoccupied. There are five tenants, including the Crown Prosecution Service, AON and Tesco. Colmore Gate has an average weighted unexpired term of 3.4 years to expiry and 1.6 years to break and average rent of £24.37/SF.

The lure for the new owner is to nudge rents up closer to the city’s peak of £37 per SF and to increase occupancy.

The new owner plans a refurbishment to improve amenities and the building’s sustainability credentials.

Ashtrom follow in the footsteps of Galliard Homes and Apsley House Capital, which have sold the B1 office building on Summerhill, Birmingham, in a £23.5M deal.

The joint venture partners have agreed the sale with Kamco Invest Group and M7 Real Estate, which have acquired the 92.4K SF property as part of a commercial investment portfolio.

Gallieard and Apsley had planned an apartment scheme on the site, but spotted an opportunity in the refurbished office market and scored lettings to the Department of Work and Pensions and Solihull Mental Health NHS Trust.

The pace of deal-making in the Birmingham office market is showing signs of a strong recovery. Last week Atkins, the specialist project management business, signed for 36K SF at Federated Hermes’ Two Chamberlain Square.

Overall take-up looks set to return to something approaching pre-Covid levels. Office take-up in the spring quarter of 2021 totalled 204K SF in 24 deals, the Birmingham Office Market Forum said. This compares with 320K SF transacted in the second quarter of 2019. During Q3 the market has gathered speed, with a series of deals including a 68K SF letting to Arup and a 12K SF signing to wealth manager Tilney Smith & Williamson.

Knight Frank advised Ashtrom Properties, with JLL acting for Aviva Investors.