Dynamism is good for Brum

By Charles Toogood, Principal and Managing Director, National Offices at Avison Young

Birmingham’s office market is proving its dynamism after a surge in demand at the start of this year.

Office take-up in Birmingham reached 194,014 sq ft in the first three months of 2019, up 30% on the same period last year. This has pushed supply levels to a record low until the next stream of new, high quality accommodation comes on line next year.

Following 2018, during which just shy of 800,000 sq ft of office space was let, Grade A supply across Birmingham now stands at just 190,000 square feet, the lowest level for more than 20 years.

Recent research shows that Grade-A supply has fallen by 33% over the last 12 months, with only six months’ worth of Grade-A supply now available and 30% of that already under offer.

While one million square foot of new space is due to become available over the coming year, a large part of this, 40%, is already pre-let. And with Grade A availability falling, top rents are forecast to reach £35 per sq ft by the end of 2019 for the first time.

So, with a continuing strain on supply, there is plenty of potential for new schemes to come along and help satisfy demand.

Behavioural changes in the way companies utilise space is also contributing to the trend, according to The Office Group Chief Executive, Charlie Green. ‘The flexible office market in Birmingham is just waiting for a critical mass of good-quality operators to open it up,’ he says. ‘We need quality operators because occupier expectations in Birmingham are higher than ever on all the amenity issues, and these factors help to drive demand.’

With 1.7 million sq ft of new development in the immediate pipeline and more space in the pre-planning stage, the city remains well placed to attract demand in the medium term.

Current developments include Paradise, 103 Colmore Row, Arena Central and Snowhill, while upcoming sites include Axis Square, Beorma Quarter, Smithfield and New Garden Square.

What this demand proves is both the appeal of Birmingham as an investment destination and the sustained interest from existing occupiers as well. With a growing population and a £128 billion regional economy driving it on, the city’s prospects look bright, regardless of Brexit or other political headwinds.

The fundamentals of the local market remain positive and it only takes one large letting to reduce the amount of space currently available to practically nothing.

But the market, and the type of occupier it is attracting, is undoubtedly evolving. As well as more blue chip national and international companies looking at the city, we will see some big moves from the major serviced office providers.

This, as well as engagement from the occupier market, will further the desire for more flexible and collaborative working and buildings well served by a range of amenities and meeting space.