The availability of commercial property in Birmingham has fallen to its lowest level in five years, according to new research by Colliers International.
Even though the commercial market has been declining at a rate of nine per cent since 2008, there is only 891,000 sq ft of vacant office space left in the city, with only 600,000 sq ft of that amount being in the city centre. The latter figure is 100,000 sq ft lower than what it was five years ago.
Analysts have suggested that as more properties are absorbed in the next year, the Grade A stock will become even smaller.
Alex Tross, associate director at Colliers International in Birmingham, said: “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.”
However, it is not all bad news. Mr Tross further argues that the recent letting by Shoosmiths at Two Colmore Square is important because not only was it the biggest office occupation in Birmingham last year, but it was a sign that corporations are aware that stock levels are extremely low. Shoosmiths, the law firm, will now have two years on the 40,000 sq ft site before its lease runs out. As choice in the city is running out, property rental prices are expected to rise dramatically in the next few months.
Developers are going to have to think fast as Birmingham’s commercial property market becomes uncertain in the next year.