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Birmingham suffers commercial lag

The extent to which regional centres are lagging behind London in the commercial sector recovery has been laid bare by a report into the Birmingham market.

The Drivers Jonas Deloitte Birmingham Crane Survey for 2010 found that office development in England’s second city continued to slow this year.

Just a single start on site was recorded this year - the 18,200 sq m scheme being constructed by Thomas Vale at Woodcock Street in Ashton.

The only other new office space identified by the research forms part of the new mixed-use Tesco scheme on Icknield Street, set to include 178 sq m of office space.

This contrasts with a number of high-profile commercial construction jobs that are restarting in central London.

Several sites in the capital that were shelved in the downturn are being dusted off, with optimism increasing as Asian banks drive capital into the city.

In the same week Land Securities forward sold its £250 million Park House development to a Qatari property firm, the Qatari-backed developer behind the Shard skyscraper at London Bridge took the unusual step of buying out a major lease agreement with Transport for London in the hope that the space will be re-let at a better rate.

But outside London, commercial development is continuing to struggle.

Drivers Jonas Deloitte Midlands director Philippa Pickavance said: “With around 110,000 sq m of Grade A office space still available out of a total stock of 1.6 million sq m, and 316,000 sq m of vacant office space, we believe this will mean no new speculative office building in the city for a number of years, with continued poor demand for space at all levels.”

A total of about 17,000 sq m of office space will be delivered in Birmingham this year across four schemes.

The majority is situated within The Cube, which will provide 10,000 sq m of offices, around half of which has already been occupied by the Highways Agency.

In total, about 32,000 sq m of office space is under construction in Birmingham city centre.

The Central London Drivers Jonas Deloitte Crane Survey for the first quarter of 2010 revealed a 33 per cent fall in space under construction since the last bi-annual survey.

With about 500,000 sq m currently being built, London is heading for the most acute shortage of new supply since the early 1980s.
The London survey also hinted at signs of increased pre-letting activity and more refurbishment schemes from developers wanting to take advantage of the lack of new supply.

In the meantime, with availability falling and demand for premium space remaining, it predicts rents will continue their upward climb.

 

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