Over £2bn of office investment drives West Midlands commercial property market

Investments in the West Midlands’ office sector “soared” ahead despite an overall reduction in commercial property investment in 2022, a new report reveals.

Commercial real estate investment in the region was just under £2.2bn in 2022, a third of the previous year’s volumes, but broadly in line with the five-year rolling average, at just 7.5 per cent down, according to the annual Market Insite review by leading commercial property agents Innes England.

Offices bucked the trend by ending the year up 44 per cent on the previous year, recording £415.1m of investment transactions, while the industrial and alternative sectors continued to take the lion’s share of activity at 71 per cent.

The figures were revealed in Innes England’s 16th Market Insite report, presented virtually to an audience of hundreds of industry professionals, which monitors trends in the regional property market.

Traditionally focused on the East Midlands, this year was the first time the report included Birmingham-wide investment data, reflecting the company’s expansion to the city in 2022 under its head of office, director Adam Rock.

Adam commented: “Last year’s investment in Birmingham’s office sector surpassed 2021 volumes, with investors focusing on prime, well-let properties and purchasers targeting both prime properties along with repositioning opportunities.

“Overseas capital has been behind some of the larger transactions in recent years. There was a shortage of high-quality space and strong pre-leasing activity had encouraged development across the city, although in recent quarters occupier demand slowed due to growing uncertainty.

“Industrial investment was mixed, with an initial buzz of activity seeing investors seeking prime well-let assets on very keen yields only to stall somewhat because of rising costs of debt and inflation.”

Adam said Innes England’s Birmingham office had seen a great deal of activity since launching, which included acting for 30 clients in nine months and dealing with 100 valuations, with a focus on professional services and undertaking valuations for the major banks.

Ben Robinson, head of the company’s investment consultancy, added: “As the era of cheap money came to a rather abrupt end towards the latter part of the year many investors adopted a wait-and-see approach whilst commercial property yields re-rated across the sectors.”

By Matthew Neville – Senior Correspondent, Bdaily

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