The first quarter of 2016 has been positive for both the Birmingham and Manchester office markets as both cities showed healthy levels of activity.
Following record annual take-up of 970,458 sq ft in 2015, the Birmingham office market enjoyed its busiest-ever first quarter this year, according to the latest regional data from Colliers International.
Total take-up in the Birmingham city core reached 283,697 sq ft in Q1 2016, which comfortably surpassed the previous highest first-quarter takeup of 183,348 sq ft in 2010 and was well above the 10-year quarterly average of 171,839 sq ft.
There were 36 deals in Q1 with an average size of 7,880 sq ft, just above the average of 7,352 sq ft in 2015. Grade-A office take-up was 154,840 sq ft, accounting for 55% of all deals in the quarter.
“While we anticipate continued healthy demand from existing regional occupiers, inward investment will increasingly play a significant part in the West Midlands office market over the coming years,” said Douglas Bonham, head of Colliers’ Birmingham office team.
In Manchester, activity was a little more sluggish in Q1, with take-up of 196,533 sq ft.
This was down on Q1 2015 and below the long-term average. However, the imminent completion of the 80,000 sq ft letting to Freshfields at One New Bailey would have pushed up the Q1 figure.
Colliers said the level of active demand for office space in central Manchester remained healthy, driven both by local and national demand.
The business services sector accounted for around a quarter of the total take-up in Q1, followed by retail and leisure (21%), legal (18%) and media and tech (12%).
Given the current levels of annual grade-A office take-up and the expected completion of lease transactions under offer, the Manchester office market is likely to experience an unprecedented complete absence of ready-to-occupy supply by mid-2016, which will persist until at least Q3 2017, Colliers said.
However, that shortage is likely to ease in the coming years. The city has 1.34m sq ft of consented office schemes in eight buildings and 967,832 sq ft of grade-A space will be delivered between the end of this year and 2018.