Office leases on rise but confidence yet to pick up
BIRMINGHAM’S office leasing market grew by 19 per cent in the final six months of 2022, according to new research.
The ‘Big Six’ report, which tracks office take-up, vacancy rates and grade A rental growth across Birmingham and five other UK cities, showed 210,300 sq ft was transacted in the final quarter, helping to boost the year’s activity past the city’s fiveyear average.
The year finished three per cent up compared with 2021 but below the five and ten-year averages, according to the research published by property agency JLL.
Leasing activity increased across five of the six markets analysed, with Bristol the only city recording a
decline of a third compared to the first half of the year.
Birmingham accounted for 24 per cent of the 142 deals completed nationally last year.
Public administration was the biggest driver of activity in the second city, accounting for 27 per cent of activity, followed by professional services and banking and finance, with 24 per cent and 21 per cent respectively.
Prime rents increased by six per cent across the regions, with Bristol and Leeds seeing the strongest annual growth of 10.4 per cent and 9.1 per cent respectively.
The average prime rent across the six markets stood at just over £39 per sq ft, with only Leeds and Glasgow recording prime rents below this figure. Investment activity totalled £1.6 billion in 2022 – a nine per cent
decrease on 2021’s £1.8 billion and a 17 per cent decline on the ten-year average. Big six office investment in the second half totalled £789 million, a 28 per cent decrease compared to the same period in 2021 and a 27 per cent decrease on the second half ten-year average.
Birmingham was the only market to outperform its five and ten-year annual averages in 2022.
Kelvin Craddock, a director at JLL in the Midlands, said: “Birmingham continues to dominate the big six in terms of office leasing and investment and it’s promising to see that environmental, social and governance credentials are topping occupiers’ requirements.
“With three major schemes under construction or refurbishment set to complete in the first half of this year in Birmingham, and with a good proportion of demand continuing to target grade A space, it’s likely that we’ll see a supply gap emerge in the second half of 2023.”
Head of UK offices research Elaine Rossallat added: “An overall pick up in activity across our six markets is heartening to see but to be trending below five and ten-year averages suggests confidence hasn’t picked up to the extent we would have liked just yet.
“What’s needed now is economic stability and a clear plan for growth for the regions which in turn will spur investors into longer-term spending on our cities.
“Our big six cities have bounced back well from the pandemic and will be crucial to the broader economic recovery – what they need now is the support and stability needed to fulfil their potential.”