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Market Watch Birmingham Office June 2017

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Market Watch Birmingham Office June 2017 Savills World Research UK Commercial Market Watch Birmingham Office June 2017 Brindleyplace acquisition sees first quarter office GRAPH 1 investment reach £323m Take-up by quarter n Top rents stand at £32.50 per Q1 Q2 Q3 Q4 Annual Average Market Snapshot 1,000,000 sq ft but we expect this to grow 900,000 n Take up reached 129,520 sq ft in beyond the historic headline of £33 800,000 Birmingham city centre during the per sq ft as prime developments 700,000 first quarter of 2017, 3% above the near completion toward the end of 600,000 ten year first quarterly average. 2018. 500,000 400,000 Take Up (sq (sq Up ft) Take n The key deal was Arcadis n The much anticipated delivery of 300,000 200,000 Consulting taking 22,953 sq ft over Three Snowhill (pictured overleaf) 100,000 two floors at Cornerblock, formerly will provide further Prime Grade A 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 known as Two Cornwall Street, set space on completion in 2019. Q1 to complete imminently. n The first quarter of 2017 saw Source: Savills Research n The most active business £323 million of office investment in GRAPH 2 sector during the first quarter was Birmingham, over three times the Availability the engineering sector, which 10 year quarterly average. accounted for 18% of take up. We Prime Grade A Other expect a number of engineering n This was largely down to HAIL's 4,500,000 firms to remain active over the next (HSBC Alternative Investments) 4,000,000 two years in the wake of HS2. record £265 million acquisition of 3,500,000 Brindleyplace, reflecting a yield of 3,000,000 n With a shortage of large deals in 6%. 2,500,000 the first quarter, 49% of deals were 2,000,000 in the sub 10,000 sq ft size band, n Overseas investors remain (sq ft) Supply 1,500,000 above the long term average of the dominant investment type in 1,000,000 38%. Birmingham, following Alduwaliya's 500,000 - £22.5 million purchase of 111 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 n We expect total take up for the Edmund Street. With a weak Q2 city centre market to reach 750,000 Sterling, regional offices remain Source: Savills Research sq ft during 2017, following the attractive to the overseas market. large requirement from HMRC. GRAPH 3 n However, the UK institutions have Top rents n Following the arrival of 55 a presence in Birmingham during Colmore Row, total supply saw 2017, following the West Midlands £36 a 4% increase to 2.6 million sq ft Pension Fund's £26 million £34 since the end of 2016. 55 Colmore purchase of 2 St Phillips Place. £32 Row currently provides 112,000 sq ft of available space following a n Birmingham's prime yields £30 comprehensive redevelopment. currently stand at 5.25%, in line £28 £26 with the average prime yield across Top Rent (£) n Prime Grade A availability has the UK regions. We expect yields £24 increased from 552,000 sq ft to to remain stable through 2017, £22 576,000 sq ft, which is only enough with sustained demand for well let £20 to cater for around 18 months worth assets. n 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 of Grade A demand. Source: Savills Research savills.co.uk/research 01 Market Watch | Birmingham Office GRAPH 4 Office investment by quarter Q1 Q2 Q3 Q4 £900 £800 £700 £600 £500 £400 Investment (£m) £300 £200 £100 £0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Three Snowhill, above will provide 420,000 sq ft of office space on completion during 2019 Source: Savills Research, Property Data TABLE 1 Significant Deals in Q1 2017 Address Sq ft Grade Business Sector Tenant Cornerblock, 1st and 2nd floors 22,953 A Engineering Arcadis Consulting Colmore Gate, 4th floor 18,378 A Serviced Offices ihub Alpha, 20th and 21st floors 14,200 B Serviced Offices Alpha Works Business and Consumer 10 Temple Street, 4th and 5th floors 10,035 A S Three Services Savills Birmingham Office Agency & Investment Please contact us for further information Nick Williams Ben Thacker Jon Ottewell Joe Shorney Leasing Leasing Leasing Leasing 0121 634 8401 0121 200 4561 0121 643 8419 0121 200 4567 [email protected] ben.thacker@savills. [email protected] joe.shorney@savills. com Clare Bailey Steven Benson Andrew Bull Ned Jones Research Investment Investment Investment 020 7409 8863 0121 200 4578 0121 634 8403 0121 634 8415 [email protected] stephen.benson@ [email protected] [email protected] savills.com Savills plc Savills is a leading global real estate service provider listed on the London Stock Exchange. The company established in 1855, has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 700 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East. This report02 is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. Whilst every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research..
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