Top grade office accommodation in Birmingham city centre has shrunk to its lowest level of availability for five years, a new survey reveals.
Across the city, just 891,000 sq ft of space of vacant prime stock is on the market following four consecutive years of attrition, at an average rate of nine per cent per annum.
The declining trend in the office stock market since 2008 emerged following new research from Colliers International, real estate specialists.
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Colliers say around 600,000 sq ft of the vacant accommodation is in the city centre, more than 100,000 sq ft lower than when the property market took a nosedive in 2008.
Alex Tross, associate director in the office agency team at Colliers International in
Birmingham, said 2013 would see much higher rates of absorption, resulting in a chronic shortage of Grade A stock.
“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.”
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Mr Tross said occupiers were now starting to wake up to the looming stock shortage.
“Shoosmiths’ letting at Two Colmore Square at the back end of 2012 is significant for two reasons: at 40,000 sq ft it was Birmingham’s biggest office letting last year.
“Secondly, the law firm has two years before its existing lease expires. However, they have pounced on new space early because they are aware that stock levels are running low.
“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.” He said the city’s failure to replenish stock meant accommodation across the board was depleting.