Quarter 4 | 2019

UNITED KINGDOM BIRMINGHAM OFFICES

QUARTER 4 | 2019 Q4 2019 | Birmingham Offices | United Kingdom 2 Research & Forecasting Report | Colliers International > > > CENTRE CITY > Take-up FIGURE 1: Grade A transaction above 20,000 sqft. 72,261 sqftatOneBrindleyplace.InQ4, there wasonly one 229,042totalling sqft.TheCommonwealth Games took responsible for three of the Top 5largest dealsof the year, A deal this year taking 110,000 sqft.WeWork were pre-commitment atPlatform 21was the largest Grade 604,321totalling sqft.TheSecretary ofState’s 77% of total take-up in2019wasfor Grade Aspace, of 104,893sqft transacted inonly 26deals. Leasing activity inQ4was the lowest this year witha total exceeded the 10-year average take-up by 10%. was 4%higher than 2018.2019 total transaction levels also with a total of780,095 sqft transacted in116deals,which Annual take-up inBirminghamcity centre endedin2019 were for Grade Bstock. up. Of the 80dealsin the lower sizebands,57of them 3,000 sqft,accounting for a total of111,483 sqftof take- comprised offive deals.Notably there were 80dealsbelow ft andabove, 412,083 sqft;however, this total wasonly More than halfof total take-up wasfor deals50,000 sq SERVICED OFFICESTAKE-UP SQ FT 229,042 SQ FT 780,095 2019 ANNUALTAKE-UP TAKE-UP QUARTERLY BIRMINGHAM

110,780 2019 KEYDEAL SQ FTTOSECRETARY OFSTATE Figure Quarterly 1: Birmingham Take-up sq ft (thousands) £34.50 HEADLINE RENT 1,000 1,200 PSF 200 400 600 800 0

2008 Q1

2009 Q2 > > 2010 > Q3 5,000 sqft. of number ofdeals,18whichwere for transactions below The Media&Technology sector wasmostactive in terms three ofwhich dealsall transacted inQ2. throughout 2019accounting for nearly 230,000 sqftin WeWork alonedominated the servicedofficesector activity centre over the course ofnext year. expecting occupier demand to remain strong in the city with onelandmarkdealalready signedinQ12020,we are Birmingham city centre remains attractive to occupiers and improved sentimentamongstoccupiers andinvestors. The solidresult of the General Electionin the UKhas

2011 average 10-year Q4

2012

2013

2014

2015 Source: Colliers International 2016 1-3k 3-5k 5-10k 10-15k 15-25k 25-50k 50k

2017

2018

2019 Q4 2019 | Birmingham Offices | United Kingdom 3 Research & Forecasting Report | Colliers International

No of Deals No of Deals 20 18 16 14 12 10 8 6 4 2 0 Government Property Agency 90 80 70 60 50 40 30 20 10 0

50K+

Manufacturing

Others Logistics 110,780 sq ft 110,780

25-50K

Engineering International Colliers Source: Source: Colliers International Colliers Source: Source: Colliers International Colliers Source: Medical

92,670 sq ft Education

15-25K Transport sq ft 81,280 No of Deals 72,261 sq ft

10-15K

Retail & Leisure & Retail

Property Engergy & Utilities & Engergy sq ft 55,092 Grade C Grade 5-10K

46,750 sq ft 46,750 Media & Tech & Media

40,277 sq ft Business Services Business 3-5K Grade B Grade

No of Deals

Financial Services Financial

Public Sector Public Legal 0-3K

Take-up Grade A Grade Government 21, Platform Birmingham Birmingham Newhall Street 6 Brindleyplace, 55 Colmore Row 55 Colmore 0 0 Stephenson Street One Brindleyplace, 50 50 150 100 350 150

450 250 300 100 400 200 250 200

Louisa Ryland House, The Colmore Building The Colmore

2 Chamberlain Square Serviced Oces Serviced

sq ft (thousands) (thousands) ft sq sq ft (thousands) (thousands) ft sq Figure 2: Birmingham Q3 2019 O ce Take-up by Size Band Size by Take-up 2: Birmingham Q3 2019 O ce Figure Figure 3: Q3 2019 Birmingham O ce Demand by Type 3: Q3 2019 Birmingham O ce Demand by Figure Figure 4: Occupier Deals 4: Occupier Figure By Type By By Size Band By BIRMINGHAM BIRMINGHAM ANNUAL OFFICE TAKE-UP BIRMINGHAM BIRMINGHAM ANNUAL OFFICE DEMAND BIRMINGHAM BIRMINGHAM 2019 TOP OCCUPIER DEALS FIGURE 2: FIGURE 4: FIGURE 3: Q4 2019 | Birmingham Offices | United Kingdom 4 Research & Forecasting Report | Colliers International city centreassetsthemost sought after investor demandwithincome producing Birmingham willcontinueto attract > Supply > Rents > rents to continue to increase in2020. to £34.50 psf.We anticipateheadline Prime rents in the city centre increased secured asubstantialpre-let. complete inQ12020andhasalready largest speculative development due to 3 Snow (420,000 Hill be sqft)will the deliverwill 233,000 sqftinMay 2021. June of this year. 103Colmore Row construction anddue to complete by 2017. There is955,110 sqftunder pre-let initsentirety to PWC inQ4 Square (150,000 sqft),whichwas at the endof2019. OneChamberlain One Grade Adevelopment completed 3.28%. to letandPrimeGrade A vacancy of with a total of248,869sqftavailable was eroded further in the CBDarea stood at395,903 sqft.Grade Asupply Overall city centre Grade Aavailability > > Investment > for £140million. Priory CourtandTheLewisBuilding Gulf IslamicInvestments’ purchase of largest investment dealof2019after yield of5.32%. TheMailbox was the Street for ataninitial £61million, Management purchased 45Church of London.Royal LondonAsset use investment acquisition outside yield of6.5%, saw the largest mixed- Mailbox for ataninitial £189million, M7 Real Estate’s purchase ofThe £263 million. of five investment dealsinQ4 totalling 10-year average. There were a total increase on2018and59%above the Birmingham in2019,almosta50% A total of£611million transacted in sought after. producing city centre assets the most investor demandwithincome as Birminghamcontinues to attract We expect yields to remain unchanged Prime officeyields remainedat 4.75%. Q4 2019 | Birmingham Offices | United Kingdom 5 Research & Forecasting Report | Colliers International

Prime Yields H2 2019 H2

8% 7% 6% 5% 4% 3% 2% 1% 0% 2019

2019

H1 2019 H1

2018

H2 2018 H2 2018

H1 2018 H1

2017 2017

H2 2017 H2

2016

Source: Colliers International Colliers Source: 2016 Source: Colliers International Colliers Source:

Source: Colliers International Colliers Source:

H1 2017 H1

2015

H2 2016 H2

2015

H1 2016 H1 2014

2014

H2 2015 H2

2013

H1 2015 H1 2013

2012 H2 2014 H2

Grade C Grade

Q4Q4 2012

2011 H1 2014 H1

10-year 10-year Average Prime Yields

2011 2010 H2 2013 H2 Q3Q3

Grade B Grade

H1 2013 H1

2009 2010

Q2Q2

H2 2012 H2 2008

Prime Rents 2009 Grade A Grade 2012 H1 Q1Q1 £15 £10 £35 £25 £30 £40 £20 0 0

100 700 300 500 800 600 400 200 500 (psf) Rents Prime

1,500 1,000

2,500 2,000 sq ft (thousands) ft sq £s (millions) £s Figure 5: Birmingham Prime O ce Rents & Yields Yields O ce 5: Birmingham & Rents Prime Figure Figure 6: Birmingham O ce Investment Volumes (Millions) Volumes 6: Birmingham O ce Investment Figure

Figure 4: Birmingham City Core Availability Availability 4: Birmingham City Core Figure

2019 2018

by Grade by BIRMINGHAM BIRMINGHAM CITY CORE AVAILABILITY BIRMINGHAM BIRMINGHAM OFFICE PRIME & RENTS YIELDS BIRMINGHAM BIRMINGHAM OFFICE INVESTMENT VOLUMES

2017

2016

FIGURE 7: 2015 FIGURE 6: FIGURE 5:

2014

2013

2012

2011

2010

2009 2008 Q4 2019 | Birmingham Offices | United Kingdom 6 Research & Forecasting Report | Colliers International FIGURE 1: FIGURE 2: M42 M42 TAKE-UP TAKE-UP 2019 M42 by SizeBand > > >

House, Solihull. on 11,093 sqftofofficespacein Pegasus largest of these dealssawLlamasoft transact transactions, with13dealsduring2019. The accounted for the largest number of total however, the Media&Technology sector market in terms of total square feet transacted; No sectors dominated the M42occupier were for transactions below 5,000 sqft. size bandsin2019, however, mostdeals(30) There wasnoclear trend for leasingactivity in Business Park. let by aprivate tenant atPlotA2,BlytheValley was for 17,101 sqft,whichwas taken asapre- sq ftin13deals.Thelargest deal this quarter of 375,417 sqft.Q4 total take-up wasat54,786 361,153 sqft,nearly reaching the 5yr average Annual out-of-town leasingactivity wasat Figure 2 M42Q32019 Take-up by Size Band Figure M42 1.Birmingham Take-up sq ft (thousands) sq ft (thousands) 200 400 600 500 300 100 100 20 40 60 80 50 90 30 70 10 0 0 Q1 Take-up 0-3K

2014 Q2 No ofDeals 3-5K Q3 2015 5-10K Q4 > > >

rents throughout2020. market continue will to putupward pressure on expect the lackofsupply in the out-of-town secondary rents increased to £18.50 psf.We Prime rents increased to £26.00psfand resulting in4.80%overall vacancy. fall, with total availablespaceat406,194 sqft, year-to-date sawavailability levels continue to The lackofnewsupply andstrong leasinglevels pre-letscontinue. to supply continues, we expect the prevalence of A, BlytheValley Business Park.As the lackof largest being90,001 sqftleasedby ZFatPlot dealsaboveall 15,000 sqftwere pre-lets, the three dealsaccounting for 132,922 sqft.83%of occupier market in2019. There were a total of Pre-lets played asignificantpartin theM42 2016 10-15K Average 5-year 15-25K 2017 Source: Colliers International Source: Colliers International 25-50K

2018 50K+

2019

0 2 4 6 8 10 12 14 16 No of Deals of No Q4 2019 | Birmingham Offices | United Kingdom 7 Research & Forecasting Report | Colliers International

No of Deals Vacancy (%)

14 12 10 8 6 4 2 0 2019 25 20 15 10 5 0

2019

2018

Environment

2018

2017 Insurance

Medical

2016

2017

Logistics

2015

Education

2016 International Colliers Source: Source: Colliers International Colliers Source: Source: Colliers International Colliers Source:

2014 Property

2015

Unknown

2013

Utilities 2014

2012

2013

2011

Retail & Leisure & Retail

2010

2012

Financial Services Financial

Private

2009 Business Services Business

2011

Vacancy 2008

No of Deals

Serviced O ces Serviced

2010 Secondary

2007

Manufacturing

Engineering 2009 2006 Take-up Availability

Prime Media & Tech & Media 2005

0 0 10 Automotive 70 30 90 50 80 60 40 20 100 500 1,500 1,000 2,500 2,000

5 Figure 3 M42 Q3 2019 Take-up by Business Type Business by Take-up Q3 2019 3 M42 Figure 0

15 10

25 30 20

sq ft (thousands) (thousands) ft sq sq ft (thousands) (thousands) ft sq Rate Vacancy & M42 Availability Figure4. £s psf £s Figure 5. M42 Prime Rents (psf) 5. M42 Prime Figure

2019 2018

by Business Type Business by

M42 2019 M42 2019 TAKE-UP M42 PRIME (PSF) RENTS

M42 M42 AVAILABILITY & VACANCY & VACANCY RATE

2017 2016

FIGURE 3:

FIGURE 5: FIGURE 4: 2015

2014

2013

2012

2011

2010 2009 FOR MORE INFORMATION

OFFICE AGENCY NATIONAL CAPITAL MARKETS Douglas Bonham Alex Titheridge +44 121 265 7616 +44 20 7487 1617 [email protected] [email protected]

Richard Williams RESEARCH & FORECASTING +44 121 265 7630 Lisa Dean [email protected] +44 20 7487 1961 [email protected]

This report gives information based primarily on Colliers International data, which may be helpful in anticipating trends in the property sector. However, no warranty is given as to the accuracy of, and no liability for negligence is accepted in relation to, the forecasts, figures or conclusions contained in this report and they must not be relied on for investment or any other purposes. This report does not constitute and must not be treated as investment or valuation advice or an offer to buy or sell property. Colliers International | UK 50 George Street Colliers International is the licensed trading name of Colliers International Property Advisers UK LLP (a limited liability partnership registered in England and Wales with registered number OC385143) and its subsidiary companies, the full list of London W1U 7GA which can be found on www.colliers.com/ukdisclaimer. Our registered office is at 50 George Street, London W1U 7GA.