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That sound you can hear in the office of every Birmingham property consultancy and developer? That is the warning siren for a severe shortage of standing office stock.
Birmingham's office take-up was not brilliant in 2018, although it is beginning to pick up speed in 2019, but even a slowish market has eaten deeply into supplies of new workspace.
The latest analysis by Savills shows supply currently standing at 1.9M SF, the lowest on record. Savills research shows that Grade-A supply has fallen by 33% over the last 12 months, with only three months’ worth of Grade-A supply currently available.
The market is likely to get tighter still. Although 1M SF of office accommodation is due to become available between now and 2020, 59% of this is already pre-let.
Savills goes on to note that with Grade-A availability continuing to fall, top rents are forecast to rise above £34/SF by the end of 2019. Top rents for the first quarter of this year are presently £33/SF per SF.
“In spite of 1M SF of office space coming into supply figures by the end of 2020, which includes prime schemes such as Three Snowhill and Two Chamberlain Square in 2019, we are continuing to see a strain on supply, reinforced by the uplift in take-up which we have seen this quarter," Savills Director Ben Thacker said.
"Demand from larger occupiers seeking space within the next two years remains buoyant, suggesting 2019 could become the year of the pre-let for the Birmingham office market as occupiers capitalise on newly available space and mitigate the potential risk of rising future build costs while they have the chance.”
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