Public Sector Cuts could Impact Birmingham’s Office Market
Research released at CBRE’s recent Midlands Market Insight Seminar claims that Birmingham’s conventional office market is “over-reliant” on the public sector.
CBRE’s figures show that 50% of office take-up during 2009 went to the public sector, but in the wake of the coalition Government’s intention to make dramatic cuts to the sector’s budget, this trend is now deemed unsustainable.
According to the Birmingham Post, Mike Stephens, valuation advisory director at CBRE’s Birmingham office, said:
“There is a short-term moratorium on new government leases, which means the much hoped for exodus of civil servants from Whitehall to the regions is no longer anticipated, at least in the foreseeable future.”
He added: “What’s more, the Smith Report, ‘Relocation – Transforming Where and How Government Works’, appears to have pitted the regions against one another, with different regional centres promoted as ‘hubs of excellence’ for different public sector specialisms.”
There is also concern that Birmingham is unlikely to see any speculative development, due to a surplus of Grade A space in the city. However it is expected that the private sector will soak up the majority of the city’s Grade A space.
CBRE predict that investment activity in Birmingham will improve later in the year.