Birmingham office market research — Quarter 1 2022

Birmingham city centre delivered a very respectable first quarter 2022, securing 175,261 sq ft across 32 office space transactions.

Not only was it above the 10-year average Q1 take-up of c. 167,000 sq ft but, due to its broad spread of deals – in both size and sector – it was also achieved without a significantly-sized ‘landmark’ transaction, which often dominates and drives the figures within the Birmingham office market.

Q1 2022 stats

1 7 5 , 2 6 1

total take-up (sq ft)

2 7 , 1 3 2

largest deal (sq ft)

3 2

total transactions

Birmingham office market Q1 take-up (sq ft)

 

Birmingham office market Q1 take-up sq ft

Birmingham office market at a glance

  • Key transactions – transactions over 10,000 sq ft
  • Office of the Public Guardian expands – department grows at Victoria Square House
  • Cubo brings serviced offices to Paradise – flexible opportunities ahead
  • 103 Colmore Row keeps trailblazing – new building on a roll with more occupiers
  • ‘Legally fond’ of Birmingham offices – legal firms taking space at pace
  • Education, Education, Education – online learning boom drives sector take-up
  • Goldman Sachs grows in city with WeWork – bank makes good on Birmingham plans
  • Expansions in Birmingham office market – businesses increasing office stakes
  • HS2 halo delivers Mace Dragados – Curzon and Euston station contractor takes space
  • Outlook – a bright future for the Birmingham office market

Key transactions

Birmingham city centre transactions over 10,000 sq ft in Q1 2022

Office buildingSize (sq ft)OccupierBusiness sector
Victoria Square House27,132Office of the Public GuardianGovernment
Two Chamberlain Square24,297Cubo WorkServiced offices
103 Colmore Row12,132GallaghersInsurance
103 Colmore Row12,132Browne JacobsonLegal
Total75,69343% of take-up, 4 transactions

Office of the Public Guardian expands

The largest letting of the quarter was to the government body, Office of the Public Guardian (OPG), which took 27,132 sq ft at Victoria Square House. OPG polices the activities of deputies, attorneys and guardians who act to protect the financial affairs of people who lack the mental capacity for making these decisions.

The department had previously taken 10,161 sq ft at Victoria Square House in Q2 last year, when it relocated from Axis in Birmingham, which it had to vacate for the building to be refurbished.

External view of Victoria Square House - Birmingham office market largest deal
Victoria Square House, Colmore Business District, Birmingham city centre

This new letting is a significant expansion for OPG at Victoria Square House, seeing it now occupy 37,284 sq ft. This represents almost a quarter of the 160,000 sq ft building, dating back to 1891, that was designed in the French Renaissance style and has been refurbished to Grade A specification.

Government departments feature regularly in the office transactions in Birmingham city centre. The city is popular with the public sector, and there has been a government programme of office space consolidation in the region. This has seen various departments bring together smaller regional office locations into single, larger offices based in the city centre.

Cubo brings serviced offices to Paradise

As quality and flexibility reign supreme in the Birmingham office market, as well as further afield, serviced office operators are seeking some of the city’s best office space to attract occupiers.

The relatively new serviced office operator, Cubo, has taken its first space in Birmingham city centre, securing Two Chamberlain Square’s entire fourth floor – totalling 24,000 sq ft . The site will be the company’s fifth location since it launched in 2021, having already opened in Nottingham, Leeds, Sheffield and Derby.

External view of Two Chamberlain Square - 2nd largest Birmingham office market deal
Two Chamberlain Square, Paradise, Birmingham city centre

Cubo has committed to a 12.5-year lease at the building, and this will provide the Paradise development with its serviced office offering. This allows Paradise to welcome smaller occupiers – and occupiers requiring smaller space on a flexible basis – and, in so doing, diversify the overall business community calling Paradise home.

Rob Groves, Regional Development Director, MEPC, said: “The arrival of Cubo brings a further high-profile and high-quality occupier to Two Chamberlain Square and is another vote of confidence in the business health of the city centre.

“We’re confident Cubo will quickly become an established part of the city’s business community and an asset for the Paradise estate.”

In Q2 2021, serviced office operator, x+why took 40,616 sq ft at 6 Brindleyplace (now called Foundry) to create a flexible office offering. x+why’s fit-out at the building is soon to complete, with the site due to open in May 2022. In the same quarter, they also took 34,500 sq ft at 103 Colmore Row.

103 Colmore Row keeps trailblazing

Coming off the back of a successful first year of marketing, which saw 95,992 sq ft let, 103 Colmore Row is showing no signs of slowing down. In Q1, the building secured two lettings, totalling 24,264 sq ft.

The first of these lettings was to global insurance and risk management firm, Gallaghers. Taking the whole of the 13th floor of the building on a 10-year lease, the business is bringing all 150 members of its Birmingham team – currently spread across three locations – together in one office.

External view of 103 Colmore Row with 2 Q1 Birmingham office market deals
103 Colmore Row viewed from Victoria Square, Birmingham city centre

Tom Gunn, Head of Real Estate & Facilities at Gallaghers, said: “Having previously operated three separate offices in Birmingham, our move to 103 Colmore Row will enable us to bring everyone together under one roof and provide a modern and spacious workspace for both our colleagues and clients in a prime city centre location.”

103’s second Q1 letting was to legal firm, Browne Jacobson, which also takes a whole floor – the 15th floor – to relocate 185 staff. They will be relocating by the end of Q3 2022 from Victoria Square House – where, as previously mentioned, the OPG is taking additional space.

James Tait, Head of Browne Jacobson’s Birmingham office, said: “For us, Birmingham is without doubt one of the most exciting cities in the country to live and work in. The city has undergone a major transformation in recent years and, with the Commonwealth Games just around the corner, there is a palpable buzz.

“Against this backdrop, we are thrilled to announce our move to 103 Colmore Row. The building’s central location, innovative design, state-of-the-art facilities and first class ESG credentials are second to none and offer the perfect agile and collaborative working destination for our people and clients.”

In both of these transactions, the space taken for the size of team indicates a hybrid working policy – where many staff will work from home some or most of the time.

‘Legally fond’ of Birmingham offices

Birmingham city centre has seen a broad range of businesses taking space this quarter, but it was a notably strong outing from the legal sector – with six deals totalling 31,513 sq ft, representing 18% of take-up in the quarter.

Legal firms taking space in Birmingham city centre, Q1 2022

Office buildingSize (sq ft)Occupier
103 Colmore Row12,132Browne Jacobson
One Temple Row6,987Capsticks
One Temple Row5,651Greens Solicitors
1 Newhall Street3,477Roythornes Solicitors
Cavendish House1,649Harper James Solicitors
The Southside Building1,617Communicourt
Total31,51318% of take-up, 6 transactions

Two of these transactions took place at One Temple Row, which accounted for three deals in total in the quarter. The 12-storey building has undergone a multi-million-pound refurbishment to provide open plan office space, new reception area, communal roof terraces, business lounge, café and enhanced cycle, changing and shower facilities.

External view of newly refurbished One Temple Row featuring in Birmingham office market this quarter
One Temple Row, Colmore Business District, Birmingham city centre

The professional services sector often forms a major constituent of the transactions in Birmingham’s office market. Staff recruitment has become increasingly challenging for businesses in recent years, with the well-publicised skills shortage across the country. However, occupiers within the legal sector are reported as seeing Birmingham as ‘offering hope’. The city has proven very popular with businesses seeking skilled staff – particularly graduates – thanks primarily to its wide catchment area with multiple, renowned universities delivering graduates in a variety of specialisms.

Education, Education, Education

This quarter, there were also notable office space transactions to educational institutions – totalling 17,673 sq ft, 10% of take-up. These included Elizabeth School of London, the College of Medicine & Dentistry and University of Wales Trinity Saint David.

With the unavoidable mass requirement for remote learning through the pandemic, the education landscape has been changed. Organisations that offer remote learning have seen a significant increase in demand for their services, even with students – of all ages – now having returned to the classroom.

Elizabeth School of London

Online education provider, Elizabeth School took 9,769 sq ft at 35 Waterloo Street in a rare purchase of Birmingham office space by an occupier. Owner occupiers are seldom seen in the Birmingham office market, particularly where medium and large office space is considered.

College of Medicine & Dentistry

The College of Medicine & Dentistry has taken 4,192 sq ft at 2 Colmore Square. Established in 2013, the college is the first independent postgraduate education provider offering a wide range of qualifications from MSc to PhD and Professional Diploma level for dentists and healthcare professionals.

The University of Wales

The University of Wales Trinity Saint David took 3,712 sq ft at Vincent House, Quay Place close to Brindleyplace. With their Birmingham Learning Centre first established in 2018, the University of Wales offers hybrid learning, with courses conducted partly on-site and partly from home.

We also understand that another educational institution is due to take 8,000-10,000 sq ft next quarter, and so we could continue to see significant transactions from occupiers within this sector.

Goldman Sachs grows in city with WeWork

In the first quarter of 2022, banking giant Goldman Sachs took 7,090 sq ft within the WeWork flexible workspace operation at 55 Colmore Row. This follows on from the 7,551 sq ft taken at the same building in Q2 2021. The bank is making good on its plans to establish a substantial Birmingham operation and its total occupancy to date stands at 14,641 sq ft.

The bank announced its plans at the start of last year, with Richard Gnodde, Chief Executive Officer for Goldman Sachs International, saying at the time: “Establishing a new office in Birmingham will diversify our UK footprint and give us access to a broad and deep talent pool in the local area. We see tremendous opportunity to enhance our UK presence and continue delivering for our global clients.”

External view of 55 Colmore Row, Colmore Business District, offices Birmingham city centre
55 Colmore Row, Colmore Business District, Birmingham city centre

Selecting the WeWork operation at 55 Colmore Row, although more expensive than traditional leased office space, is a smart move for the bank. The managed space at the building offers the necessary flexibility and capacity for expansion – whilst reducing liabilities and responsibilities. At the same time, it provides the business with a home in a renowned, landmark building in the city’s prime Colmore Business District.

Whilst it’s speculation at this stage, we would envisage that, once the bank has carried out this programme to establish a substantial Birmingham team, it will seek a permanent residence in the city on a traditional lease.

Consequently, it’s also worth noting the additional prudence of their approach at this moment in time. Flexibility today, when office strategies are undergoing a seismic shift in response to hybrid working, allows them to make a commitment once they are certain of what their requirements will be.

Expansions in Birmingham office market

Expansions are a popular theme in the Birmingham office market this quarter, indicating a healthy and prosperous economy in the city.

The largest letting of the quarter was itself an expansion for the OPG, which went from occupying 10,161 sq ft to 37,293 sq ft at Victoria Square House – a 267% increase in stake at the building.

In addition to this, we have:

  • The previously mentioned letting to Goldman Sachs at WeWork is also a significant expansion – with the bank’s stake doubling to almost 15,000 sq ft.
  • Legal firm, Capsticks, taking 6,987 sq ft at One Temple Row.
  • Gleeson Recruitment securing 6,321 sq ft at Edmund House, where in 2018 it took 4,693 sq ft.

HS2’s halo delivers Mace Dragados

HS2 contractor, Mace Dragados has taken 4,124 sq ft at 1 Edmund Gardens. Mace is already based in offices at Enterprise House within Edmund Gardens, and so this letting can be regarded as another expansion in the quarter.

External view of 1 Edmund Gardens, offices Birmingham city centre
1 Edmund Gardens, Birmingham city centre

Mace and Dragados were awarded the contracts to deliver HS2’s Curzon and Euston stations. Birmingham’s Curzon Station alone is a project worth up to £570m and understood to represent 1,000 new jobs.

The team, which previously undertook the refurbishment of Birmingham New Street Station, has now taken space at 1 Edmund Gardens, putting them in close proximity to HS2’s head office at Two Snowhill.

Outlook

The future for the city is bright, with enquiry levels for space across the Birmingham office market increasing. With this in mind, and the number of negotiations for office space already underway, there is a very promising outlook for the market’s year-end. Growth will continue and the number of deals will increase, as we see more of the ‘bread-and-butter’ requirements returning to the market.

Furthermore, there are some exciting transactions we can expect to see in the figures, such as the already announced letting of space at Two Chamberlain Square to investment firm, Cazenove Capital.

The flight to quality very much continues and the demand for the very best space is pushing up headline rents. In general, occupiers are not looking to cut costs. Businesses are looking to make their proposition to existing and prospective employees as appealing as possible, with both retaining and attracting skilled staff being of paramount importance. Consequently, ESG (Environmental, Social and Governance) criteria are at the very top of the priority list and this drives that need for well-located, high-quality office space in the city.

See full details of the transactions featured in our Birmingham office market research, comprising office space in Birmingham city centre and Edgbaston.

For more information on the Birmingham office market, please contact Malcolm Jones on 0121 233 2330 or email mjones@kwboffice.com.

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