REAL ESTATE

[Real Estate] Office Market Review of Birmingham (UK)

Table of Contents

1. INTRODUCTION3

1.1 Research Background3

1.2 Research Motivations and Objectives5

1.3 Scope and Limitation5

1.4 Research Methodology6

2. LITERATURE REVIEW7

2.1 Healthy Pipeline Will Help Birmingham in '097

2.2 Rents and Leases7

2.3 Stock Rising8

2.4 Development Pipeline9

2.5 Office Take Up & Demand14

2.6 Supply16

2.7 Peak Rental Values and Incentives17

2.8 Developments in Birmingham City Centre20

2.9 New Developments/Refurbishments Under Construction20

2.10 Sites That Have Obtained Planning Permission23

2.11 Sites Which Are Yet to Secure Planning Permission26

REFERENCES29

BIBLIOGRAPHY30

APPENDIX33

[Real Estate] Office Market Review of Birmingham (UK)

1. Introduction

1.1 Research Background

Focusing on the central Birmingham office market, this report examines take-up, supply, demand and rental growth together with investment trends. This report is one of a series of GVA Grimley regional research documents covering the office markets across various UK cities.

Birmingham city centre has an office stock of approximately 16.5 million sq ft. The market can be divided into three sectors - the prime core, the outer CBD and Edgbaston. Total office stock in the prime core extends to approximately 10.5 million sq ft, 2 million sq ft lies within the outer CBD and the remaining c.4 million sq ft in Edgbaston. Birmingham's historic prime office core is tightly defined and is bounded by the former Inner Ring Road which consists of Great Charles Street to the north. The prime core includes Broad Street and Brindleyplace. The outer CBD has traditionally been broadly defined as St Paul's Square and the Digbeth areas of the city centre. (Gordon 2009:15-20)

Land use and the historic nature of much of the prime core has to date prohibited the development of modern high specification buildings with large floorplates. This has led to many of the new office developments taking place on the edge of the CBD at locations such as Brindleyplace, to satisfy the modern requirements of some of the major corporate occupiers.

Birmingham, the second largest city in the UK, has experienced moderately strong GDP economic growth over the last 20 years and apart from a small decline in 2003 its economy has maintained positive and strong growth figures every year for over a decade (1997 - 2007). During the 'dot com' bubble the city's economic growth was robust but when the bubble burst it correspondingly slowed, with the decline felt much harder in Birmingham than the UK as a whole.

Nationally, economic growth is slowing as the credit crunch and the slow down in the US and Eurozone have an increased impact. Economic growth in Quarter 1 was 0.4% or an annual equivalent of 1.6%, well below the trend rate of growth of 2.7% per annum. The slow down is affecting rental growth and, coupled with lower capital values due to higher yields, has caused a marked reduction in development activity. Commercial and industrial new construction orders in Quarter 1 were 21% lower than in the same period last year. Economic output for Birmingham is forecast to grow at this slower pace during the remainder of 2008, however growth is expected to return to the trend rate by 2009 and ...