Birmingham city centre office market 2024 review

Key Birmingham office transactions

With a total take-up of 843,218 sq ft, 2024 has recorded the 3^rd largest total square footage take-up in the last 15 years. Only 2015’s total of 970,458 sq ft and the tremendous 2017 total of 1,007,812 sq ft, have surpassed 2024’s overall number.

This is hugely positive news for the market, highlighting consistency and confidence since having to rebuild from the impact of the pandemic.

More movement within the CBD (Colmore Business District), as well as an emerging trend of a larger, more high-profile deal being supported by several mid-range transactions, has meant the Birmingham office market has seen reliably solid take-up across every quarter.

Birmingham has established itself as a true alternative to London, attracting respected businesses, such as the BBC, to invest with large transactions in the city. This investment has made 2024 a key year for the TMT (technology, media and telecoms) sector, but surprisingly, even more so for the Education sector. The latter took 315,638 sq ft in Birmingham over the whole of 2024, the sector’s biggest take-up since records began.

While 2024 has been a year of headlining deals, it has also been one of steady, smaller transactions to aid in the smaller size brackets’ growth. 398,606 sq ft was taken across all four quarters in size brackets of 0-20,000 sq ft – 47% of the year’s total.

BBC’s Q4 deals increase 2024 investment

The BBC further established itself within Birmingham in the final quarter of the year. Agreeing two deals in Digbeth – 19,000 sq ft at The Bond, the largest of Q4, and 9,000 sq ft at Portland House, The BBC is quickly becoming a statement investor in the city.

These deals follow the corporation’s landmark occupancy of 84,000 sq ft of Typhoo Wharf, the year’s second biggest transaction. This totals 112,000 sq ft for the BBC in Birmingham over 2024, comprising 13% of the city’s total take-up alone.

It is also worth noting that the BBC’s entire take-up has been in the up-and-coming Digbeth area. With a growing entertainment scene, the ongoing construction of HS2 and its economic impact, the redevelopment of Smithfield Birmingham, as well as new commercial spaces, such as BEORMA, Digbeth is rapidly establishing itself as a key business district in the city’s future.

These factors now beg the question, which prominent brands and businesses will be next to capitalise on the area’s growing list of attributes?

Education sector is year’s most significant

Emerging as one of the most noteworthy stories in 2024, the Education sector’s growth over the year has been fascinating to observe.

The sector recorded one final deal in Q4, The School of Coding taking 9,061 sq ft at Livery Place – the 5^th largest of the quarter. This added to some of the most important transactions of the year and finalised a total take-up of 315,638 sq ft in 2024 Education deals.

This means 37% of the city’s 843,218 sq ft total take-up is comprised solely of Education. This is in large part due to three of the year’s biggest deals all residing in this sector. The 189,053 sq ft sale of 10 Woodcock Street to Aston University in Q3 is the third largest in market history. However, this was also supported by the second biggest deal of Q1, 44,670 sq ft of Baskerville House going to University College Birmingham. Finally, a second key Q3 deal, GBS occupying 68,192 sq ft of 1 Brindleyplace, solidified the extensive take-up.

When observing this against the last ten years, we can see considerable uplift in this year’s numbers. The second largest yearly take-up, 2023’s total of 155,189 sq ft over 9 deals, is only half the sector’s 2024 figure. As a result, the 2024 figure is nearly 3 times that of the 5-year average, and nearly 5 times that of the 10-year average.

Professional Services ends year on high

Encompassing all manner of services that offer advice or perform ancillary roles on behalf of a business, the professional services sector was one of the property market’s top performers in 2024.

With frequent deals made in subsectors such as legal, civil engineering, property, accountants, consultancy firms and more, 12 of Q4’s 27 transactions fell under the professional services banner. This was also true of 38 of 2024’s 96 deals – a 40% share of the year’s total.

In terms of the square footage of these deals, the professional services sector took 58,314 sq ft in Q4, forming 36% of its 2024 total of 162,570 sq ft. These figures were greatly contributed to by 8 deals in the legal subsector and consultancy firms’ 7 deals across all four quarters.

2024’s results were consistent with the five-year average. Most years penned more than 40 deals a year, other than 2020, which skewed the average with only 25 deals. Still, the data shows that when looking for consistency year-on-year within the market, the professional services sector continues to provide excellent reliability as we move into 2025.

Average transaction size increases

Aided by deals in the highest size brackets in Q1-Q3, as well as a consistent stream of mid-tier transactions, 2024’s average deal size increased to 8,784 sq ft. This is a vast improvement over the 2023 average of 6,449 sq ft and the first time the average has surpassed 7,000 sq ft since 2020.

It is important to note this 2020 average of 10,416 sq ft was affected considerably by BT’s record-breaking deal of 283,073 sq ft at Three Snowhill. However, 2024’s average deal size remains the second highest since our records began, even when considering similar deals in 2017 and 2015. The HMRC deal of 238,988 sq ft at 3 Arena Central and HSBC’s 212,000 sq ft, 2 Arena Central deal, respectively, still were unable to contribute enough to their averages of 7,635 sq ft and 7,352 sq ft, to surpass the 2024 average.

2024’s 8,784 sq ft average was also significantly higher than both the 5-year average of 7,732 sq ft, and the 10-year average of 7,202 sq ft. This again alludes to the consistency of the commercial office market currently and should be considered when making predictions for its buoyancy in 2025.

Big deals continue to boost market share

A modern trend in the Birmingham office market has been referenced already within this review. However, it should be expanded upon to show just how important these larger size bracket deals are to the overall share of the city’s take-up.

47% of Birmingham’s square footage in 2024 comprised only four transactions. The previously mentioned 10 Woodcock Street and Typhoo Wharf deals, as well as the GBS 1 Brindleyplace transaction for 68,192 sq ft and the Highways 58,697 sq ft deal at Three Snowhill, all combined for 399,942 sq ft.

While these transactions may appear as rarities in the market and unsustainable for long-term forecast, the graph shows that – since 2022 – deals made in the 20,000+ sq ft size brackets have become commonplace and convey balance in terms of the year’s overalltake-up.

It is difficult to suggest the market will continue to see these bigger deals consistently elevating figures year-on-year. However, with bigger corporates looking to increase on-site working again, with many going back to five days a week in the office – they will need

suitable space to facilitate this.

Fringe takes biggest market share ever

Properties on the outskirts of the city centre were more sought after than ever before in 2024. These fringe areas such as Digbeth, Edgbaston, the Jewellery Quarter and Aston took 371,327 sq ft, 44% of the city’s overall take-up over the last year. This is a considerable increase on both the 5-year average of 134,757 sq ft (18%), and 10-year average of 152,959 sq ft (20%).

While this could partly be seen as a result of the Q3 10 Woodcock Street deal, the take-up was still significant in Q4. 7 of the 27 Q4 deals were in fringe areas, for a total of 45,754 sq ft taken in the quarter. This represents 33% of the overall take-up in Q4, showing that the city centre is not necessarily the only viable option for businesses now.

This is particularly true as we look towards 2025. With fewer and fewer new build commercial properties available to lease this year, businesses may be forced to look at alternative options in locations they had not initially considered.

Limited availability affecting CBD deals

With fringe area popularity increasing and long-term CBD (Colmore Business District) leases shrinking availability, this is an area of the city centre that’s seen mixed results in 2024.

With 40 of the year’s 96 deals taking place in the CBD, and a similar number (41) in 2023, this is a respectable ratio. However, only 31% of the city centre’s 2024 take-up is reflected in these deals. This is a 19% decline from the 2023 figures with a difference of only 1 deal.

It could be argued that, although the CBD is still a key area in the office market, only smaller-sized transactions are currently able to be made. As we begin making predictions for 2025, it’s hard to say whether the square footage figures will bounce back or continue to decline until the lease availability becomes clearer.

Outlook for 2025

Hot commodity properties

With Birmingham city centre’s brand-new office space becoming rarer, businesses may need to act quickly in 2025 to secure their spaces. 3 Chamberlain Square, Paradise’s key new office building, has already pre-let a third of its space before opening. Those looking to confirm their letting may need to act in the first quarter.

For those still considering movement within Birmingham city centre or relocating their offices from further afield, refurbished buildings may start to become a more popular option. With several properties nearing completion for 2025, the second half of the year may see a flurry of new deals confirmed.

Education expansion

There is now a much larger focus on the Education sector and its influence over the Birmingham office market 2024 than ever before. Having taken the most amount of space in the history of the sector in 2024, it is difficult to tell if this is an anomaly or if niche education providers, such as GBS, will continue to expand across the city.

Investment and landmark deals

With the BBC cementing its investment in Birmingham over the last four quarters, it will be interesting to see if this attracts further attention from corporates looking for head office space or leasing areas for particular teams. Another landmark deal in Digbeth or other fringe city areas would be a big indicator for another year of market growth.