February 27, 2018
Commercial office market take-up in Birmingham has exceeded one million sq ft
City centre take up reached 1,005,000 sq ft in Birmingham last year, 51 percent above the 10-year average of 666,000 sq ft which marked a record year, according to Savills Research. Growth was driven in part by the Government Property Unit (GPU) deal, as public services accounted for 27 percent of take-up in the city centre last year, including the 237,000 sq ft pre-let at Arena Central. Birmingham’s boom was also boasted by take-up from serviced office providers that reached 208,000 sq ft during 2017, the highest level on record and this accounted for 21 percent of the total take-up, more than any other regional city. There now remains a shortage of Prime Grade A space in Birmingham city centre following a number of large lettings. Prime Grade A space now stands at only 169,000 sq ft, enough for only six months of take-up at average levels. Major construction project, Three Snowhill won’t complete until the second quarter of next year, when it will deliver 420,000 sq ft of much needed Grade A office space on its completion. Until then, competition among occupiers will further intensify for Grade A space.
Demand for office space in Scotland’s three largest cities pushed overall take-up beyond 2m sq ft last year, aided by a solid final quarter of occupational deals in Aberdeen and Glasgow, and an all-time record year for Edinburgh. Scotland’s offices market in 2017 reach ed2.4 million sq ft, 14 percent above the 10 year average, according to the latest Scottish Office Spotlight from Savills. In Edinburgh (city centre and wider market) office take-up amounted to a record 1.1 million sq ft boosted by the ongoing growth of tech in the city. According to data from Stack Overflow, the Scottish capital saw a 19 percent increase in data scientists employed in the city centre over the course of 2017. Activity places further pressure on supply with only 220,000 sq ft of Grade A now available which Savills suggests will push top rents to £34 per sq ft in 2018. Keith Dobson, director in the business space agency team at Savills in Edinburgh, says: “The soon to be completed 40,000 sq ft office scheme at 2 Semple Street will ease pent up demand come Q2 2018, whilst The Mint Building and Capital Square will complete in 2019 and 2020 respectively.”
Over half of UK workers (53 percent) say that the standard of technology is a key consideration for accepting a new job role and more than 1 in 3 (37 percent) would decline a job based on poor hardware alone, claims a new survey. The survey of over 2,000 British adults carried out by gadgets and technology e-tailer, LaptopsDirect.co.uk found that having the latest technology was valued more than other office perks, such as flexible working (45 percent), the working environment/decor (39 percent) and staff discounts (33 percent). Nearly a quarter of respondents (74 percent) overall, believe technology makes them more productive at work, with workers in marketing valuing technology the highest, with 84 percent of the votes, followed by those in creative and photographic (81 percent), information and communications (78 percent), professional services (73 percent) and education (71 percent).
There have been 18 months of faltering net effective rents within the commercial office market in the Capital since the Brexit referendum, with ten of the 18 Central London office submarkets monitored in Cluttons’ latest London Office Market Outlook report registering rent falls in the final quarter of 2017, buoyed by additional incentives such as contributions to fit out costs and even delayed completions becoming commonplace in many locations. The report also raises concerns about the potential for an oversupply of serviced offices within the Capital. However, despite this and a perception that Central London offices are currently fully prices or possibly over-priced, by both occupiers and domestic investors, London remains a resilient city, continuing to attract high volumes of overseas capital. Employment growth is of course expected to be influenced by both the levels of GDP growth during 2018 and the Brexit divorce proceedings, which in turn will affect rental values. But says the report, aside from concerns over Brexit, there is no evidence from recruitment agencies to suggest a current, or planned exodus of finance and banking professionals from the City.
Financial services organisations are reducing the amount of commercial office space they require as they adopt more flexible work styles. This is according to a new report from HOK’s US team, 
