Birmingham office market review Q1 2024

Key Birmingham office transactions

Top performing sectors in the Birmingham office market review

A range of sectors performed well in Q1, from media and education to healthcare and software.

Another sector of note was professional services, which accounted for 32% of transactions in Q1 2024. Sub-sectors within this umbrella included consultants in construction, financial and property as well as legal, estate agents and architects.

Later in this report, you’ll see how recruitment in Birmingham is on the rise. In April 2024, the Greater Birmingham Chambers of Commerce (GBCC) reported that 39% of businesses are anticipating that their workforce will increase over the next three months.

The evolution of the flexible office

This quarter, there has been much written about a ‘two-tier market’ emerging in Birmingham’s flexible office sector.

Higher-priced office space in Birmingham city centre has been found to be 85% to 100% fully occupied, compared with space with fewer amenities that is only 35-55% occupied.

Occupiers and employees are showing a preference for high-end workspaces with an array of hotel-like amenities and excellent customer service from on-site teams. With larger breakout areas, conferencing facilities, gyms and bar space, all these facilities support a positive working culture and aid employee engagement and retention.

BBC signs landmark deal for Typhoo Wharf

The Birmingham office market’s largest letting of Q1 2024 saw BBC Midlands take 84,000 sq ft at the Tea Factory, the historic former Typhoo tea factory in Digbeth.

Located close to the new proposed HS2 Curzon Street terminus, the site’s connectivity between Birmingham and London will be a key appealing factor for occupiers and employees.

Glenn Howells Architects will retain the shell of the nearly-century-old building and adapt its interior to create a purpose-built workspace. In addition to the offices and studios, 2,780 sq ft will be dedicated retail space.

The broadcasting giant will leave its home of 20 years, Mailbox, where it occupies 100,000 sq ft of the mixed-use development. All BBC Midlands’ teams will be relocated, including BBC Midlands Today, BBC Radio WM, The Archers and BBC Asian Network, as well as Radio 1’s Newsbeat.

BBC Director-General Tim Davie said the move would “give our teams the best facilities and technology to serve audiences for decades to come”. He added: “This is a significant step, not just for the BBC, but for invigorating the wider creative industries in the Midlands. We are transforming The Tea Factory into a world-class state-of-the-art production facility, which will benefit the region for generations to come.”

At neighbouring Digbeth Loc Studios, the future home of MasterChef, the factory site will undergo a major regeneration into the broadcaster’s most sustainable and flexible centre.

BBC Birmingham’s new state-of-the-art headquarters, which are expected to be ready for staff by 2026, will have studio spaces, editing suites, workspaces and meeting rooms on the first and second floors, while the top floor will house roof terraces. Its roof will harvest water and also generate electricity through photovoltaic panels, while a roof to the south of the building will be designed to enhance local biodiversity.

The BBC began its search for new premises in November 2021 and chose the tea factory due to the proposal’s focus on sustainability and low carbon construction, future flexibility and build design. Developers say the new building “will be instantly recognisable to everyone who travels into Birmingham on HS2, the tram or into our existing railway stations.”

UCB expands into Baskerville House

University College Birmingham has taken nearly 45,000 sq ft of office space at the Grade II listed Baskerville House building in Birmingham city centre.

Located in Centenary Square, a few minutes’ walk from Grand Central and New Street station, the space will be home to the university’s student support and student employability services. Plans include a library and quiet learning areas, as well as professional services function. The university will also establish a meetings and events space to support local businesses, employers and industry partners.

In keeping with the flight-to-quality trend, investment in Baskerville House will enable the university to meet its further growth demands by extensively repurposing its existing link building at the city centre campus. This will house the new School of Psychology, Sport and Education, which opens its doors from September 2024. It will also create additional teaching and learning facilities to accommodate continued growth across its course portfolio.

Vice Chancellor and Principal Professor, Michael Harkin said: “Our move to the flagship Baskerville House places the university right at the heart of the city centre, further strengthening our ability to serve the people of Birmingham, its businesses and employers, as well as providing our students with the outstanding support services they deserve in a world-class setting.”

Joint venture to serve tech community

Flexible workspace operator, Runway East, has signed at Birmingham’s Arca building in a joint venture with Oval Real Estate.

Located on Temple Row in Birmingham’s Central Business District, Runway East is taking 20,000 sq ft of space at the Grade A refurbished Arca office building. It will be the serviced office operator’s 10^th site in the UK and its first in the Midlands.

Arca will be home to a community of 400 members from startups and SMEs, with customisable office space for teams of four to 100 people, a large roof terrace with views over the city, thousands of square feet of breakout space and 15-plus meeting rooms and phone booths, all on site.

NHS joins iconic Alpha building

NHS Birmingham and Solihull Integrated Care Board has taken 11,270 sq ft of office space at Alpha.

Situated close to Mailbox and the Birmingham Library, the iconic 27-storey Alpha building is the second tallest office building in the city, after 103 Colmore Row. It’s stood tall in Birmingham city centre since the 1970s and, in 2021, underwent a £20 million refurbishment transforming the building into light and spacious, state-of-the-art office space.

Alpha comprises 196,000 sq ft space and is home to a variety of Grade A-specified and fully fitted Grade B office suites. Occupiers can enjoy unrivalled panoramic views of the city and take advantage of an array of contemporary amenities, from collaborative breakout spaces and an on-site café to a new wellness studio with classes, shower facilities and cycle storage.

In Birmingham, the NHS is at the cutting edge of world-class medical technology, clinical services, education and research. Medical facilities include the Queen Elizabeth Hospital, University of Birmingham, Birmingham Women’s Hospital and Birmingham Children’s Hospital.

The NHS’s city centre location at Alpha adds further support to the integrated care board’s overarching goal of overhauling the way health and social services in Birmingham and Solihull are delivered.

Dental practice expansion in Edgbaston

Dental Specialists Ltd has signed for 8,724 sq ft of office space in Edgbaston, in the latest addition to the city’s blooming life sciences sector.

The practice has expanded and relocated to 24-25 Calthorpe Road in Edgbaston from its canalside premises at 9 Waterfront Walk.

2023 saw several companies make the move to Edgbaston, including advanced cell and gene therapy specialists Adthera Bio which, in Q1, took over 4,200 sq ft at Lyndon House on the Hagley Road.

Businesses moving to Edgbaston span a broad range of subsectors within healthcare and medical, from healthcare technology and private dental treatment to maternity support services, facial and body aesthetics, and hair and beauty.

As of July 2023, the life sciences sector generates around £80.7 billion turnover nationally with 6,300 businesses across the UK. With 550 of these businesses in the West Midlands, representing the largest medical device cluster in the UK, Birmingham has become a key destination in accelerating the development and adoption of healthcare innovations.

Kennedy’s Law vacates 35 Newhall Street

Proposals to comprehensively refurbish and reposition a strategically located office building in Birmingham have been given the green light by planners, for 1980s office building, 35 Newhall Street.

Acquired by Valeo Capital in April 2023, 35 Newhall Street has around 68,000 sq ft of internal floor space across six storeys.

Its last remaining tenant, Kennedy’s Law, previously leased part of the 4^th and 5^th floors, with the lease expiring in May 2029 and a break option in May 2024. The global law firm has now taken 6,279 sq ft of space just 10 minutes’ walk away at the 14-storey Colmore Building at 20 Colmore Street Queensway.

35 Newhall Street’s transformation has been designed by Birmingham-based practice, Associated Architects, with the aim of breathing new life into the office building, carrying out extensive improvements to its tenant amenity space, whilst having reuse and sustainability at its heart.

Associated Architects plans to reuse the existing cladding and re-tint the stonework. Part of the existing plant room will also be refurbished to create a brand-new sky lounge and an inviting external terrace on the south-western portion of the roof.

Recruitment confidence improves

The GBCC recent Quarterly Business Report, sponsored by Birmingham City University, saw positive trends in recruitment with 39% of businesses anticipating that their workforce will increase over the next three months

The number of firms who attempted to recruit over the last quarter grew by 2%, while those experiencing recruitment difficulties fell significantly from 72% to 63% – the lowest figure since Q3 2021.

However, accessing the right talent remains a challenge for many businesses and will be integral in continuing to drive regional productivity and growth. To support SMEs looking to expand and scale up, the government’s Skills for Life training and employment schemes offer work experience and training to upskill existing staff.

The Skills for Life’s campaign ‘Skills Horizon 2024 Barometer’ found that nearly three-quarters of SMEs reported seeing other businesses benefit from available technical education schemes. Benefits include the opportunity to shape young talent (55%), upskill existing team members (52%) and address skills gaps in the business (50%).

L&G set to unlock development scheme

In Q1 2024, Legal and General (L&G) added to its portfolio with the purchase One Temple Row from Aviva Investors.

Located in the beating heart of Birmingham’s bustling retail district, just off Cathedral Square, the building sits next to the former House of Fraser and Rackhams building, which L&G already owns.

L&G already has planning permission to build a 640,000 sq ft office-led development and in 2019, plans revealed a reworking of the former department store to house workspaces alongside shops, bars, restaurants and a boutique hotel.

The marketing for One Temple Row, before its sale to L&G, highlighted that any new owner of the building could collaborate with L&G to redevelop the combined site with the Rackhams building, labelling the prospective scheme “the best ground-up development opportunity in Birmingham city centre”.

One Temple Row is a 105,000 sq ft mixed-use building, with around 64,000 sq ft of offices. It contains 12 above-ground office storeys, which underwent a £3 million refurbishment in the last few years, and also has 23 retail units.

High-quality refurbishments on the rise

In line with the upward trend in popularity of high-quality refurbishments, Q1 2024 saw the completion of major refurbishment works to 36 Great Charles Street in the Colmore Business District.

Phin Leslau, Asset Manager at AR&V Investments, who purchased the office building added in January 2023, said: “Securing tenancies on both spaces before completion is testament to Birmingham’s strong appetite for high-quality office space with flexible terms.”

120 Edmund Street to become The Drapery

In Q1, it was announced that Birmingham City Council had granted planning permission to Canmoor and a Credit Suisse-managed fund to refurbish and expand HSBC’s former Birmingham HQ, adding retail accommodation at street level to the vacant property.

The proposals for the existing building at 120 Edmund Street in Colmore Business District will see the building extensively refurbished with three new floors added to create a 176,000 sq ft, 11-storey Grade A office building called The Drapery. Canmoor is targeting BREEAM Excellent, EPC A and a Nabers rating of 4* for the office redevelopment.

Outlook for Birmingham office market 2024

Buildings and developments on the horizon

• 103 Colmore Row – This is now virtually full and the Paradise redevelopment is drawing to a close in Phase 3.
• Three Chamberlain Square – New CGIs have been released revealing plans to bring the natural world directly onto office floorplates. Office spaces will be bright and open, using natural, organic materials, while there will be a rooftop terrace on the ninth floor of the 10-storey building. Due for completion in 2025, the commercial building will boast both BREEAM Outstanding and NABERS 5* ratings.
• Beorma – Construction started in Q3 2023 on the 30-storey tower, providing new-build office space, available from 7,000 – 153,000 sq ft, across 12 floors. Scheduled to complete in Q3 2026, this building differs from those in the city core in that it also includes 17 upper floors of residential space.

What’s next?

With many of the larger companies now having made their city centre move to prime new office space, inward investment will be key to capitalise on the strength of Birmingham’s local occupational market.

In addition to this, there is still the opportunity for mid-market space and the flight-to-quality trend to continue across Birmingham’s commercial property market. With high-quality refurbishments to existing buildings, employees will benefit from the spacious, collaborative work environments they desire, at sensible prices and service charges that don’t impact too heavily on their employer’s bottom line.