Birmingham office market review Q3 2024

Key Birmingham office transactions

With a sizable leap forward in Q3, the Birmingham office market saw 23 deals completed with take-up of 348,690 sq ft across all sectors. This is a considerable increase from Q1’s 200,282 sq ft take-up, spread over 19 deals, and Q2’s 168,512 sq ft occupied through 29 deals.

The quarter also shows immense growth in comparison with Q3 2023. The same quarter in 2023 totalled 18 deals comprising 131,504 sq ft. This represented only 38% of Q3 2024’s total.

The rise of the education, recruitment and training sector

The office market has seen great activity in the professional services and private sectors over the last five years. However, it now seems the education sector, including recruitment and training, will be leading for the foreseeable future. Contributing 77% of Q3’s take-up, the sector has surpassed its entire occupancy across 2023 in this quarter alone, with 267,672 sq ft topping last year’s total of 173,774 sq ft.

This thriving sector has taken 315,640 sq ft of space thus far in 2024, a 44% share of the 717,484 total. This is significantly higher than its previous highest sector share of 25% in 2023.

Second to the education sector in 2024 year-to-date is TMT (technology, media and telecoms), taking 133,257 sq ft over the first 9 months, with 19% of office take-up and 20% of deals. The region’s growing success in the tech sector is discussed and fuelled by Birmingham Tech Week, the UK’s largest regional tech festival and conference with over 7,500 people attending, which takes place every October.

Nevertheless, with TMT accruing less than half of education’s take-up, it is clear just how strong the education sector has become in the past 12 months.

University secures biggest deal of 2024

Birmingham City Council’s freehold sale of 10 Woodcock Street to Aston University not only accounts for 54% of Q3’s total office take-up, but it is also Birmingham city centre’s largest transaction since BT’s historic occupancy of Three Snowhill in Q1 2020.

Residing within Birmingham’s Knowledge Quarter, the award-winning, 189,053 sq ft building will be the new home for Aston University’s Business School and Law School, as well as Aston Vision Sciences and their recently launched Integrated Healthcare Hub, just to name a few.

This singular deal contributes greatly to the city centre’s commercial property successes in Q3. If taken in conjunction with the second and third largest education deals this year (GBS’ 68,192 sq ft at 1 Brindleyplace also in Q3; and UCB’s 44,670 sq ft at Baskerville House in Q1), education has contributed 42% of the market’s year-to-date take-up.

Brindleyplace attracts education occupiers

Having drawn Lloyds Bank to 6 Brindleyplace in Q3 2023 and Harris Lamb to 4 Brindleyplace in Q2 2024, this contemporary business area has now attracted a different kind of occupier, with Global Banking School (GBS) expanding into 1 Brindleyplace.

The providers of finance, accounting and other business programmes have signed a 15-year lease for 68,192 sq ft of the building. GBS’ growth across Birmingham alone highlights the investment benefits the education sector is currently enjoying, with the new 1 Brindleyplace location adding to existing campuses at Fazeley Studios and Norfolk House.

GBS’ rapid expansion, having only recently taken the additional 29,383 sq ft to add to its campus at Norfolk House in Q4 2023, could be attributed to the flexibility of the current office rental market. Education providers are finding that the remodelling of office space for teaching purposes is a straightforward process. Furthermore, these central locations are benefiting from a host of city centre amenities and transport links to attract potential students.

Flurry of new lettings at Cornerblock

Cornerblock has struck deals with four new occupiers in Q3. The building adjacent to Snow Hill Station leased a total of 21,706 sq ft throughout the quarter, the most significant of which being the Bryt Energy (part of Stratkraft Energy) deal of 12,522 sq ft.

These transactions mark Cornerblock’s first since Q2 2023, with Arch Europe Insurance’s take-up of 4,510 sq ft. Prior to this deal, 2022 saw two other moves successfully made.

With seven deals agreed in the last two years alone, this recent activity supports the theory that businesses are becoming increasingly attracted to a new standard of refurbished, contemporary offices. Forward-thinking spaces, such as Cornerblock, that boast lifestyle and ESG facilities including gyms, shower and changing areas, and outdoor terraces, are proving themselves as worthwhile investments with each passing quarter.

New deals increase movement within CBD

For the second time this year, following the Snowhill development’s major transactions in 2020, the area has a new occupier. Trowers & Hamlin has taken 16,436 sq ft at One Snowhill – that particular building’s first deal since Willmott Dixon took 4,062 sq ft in 2018.

In Q2, Three Snowhill saw 58,697 sq ft leased to National Highways, which at that time was the largest letting of 2024 in the central business district. Now, the Trowers & Hamlin move, along with several other Q3 deals are set to give the CBD healthy movement for the year.

While the One Snowhill deal is the largest, much support comes from other smaller deals, including Melrose’s take-up of 7,725 sq ft in The Colmore Building, Lodders Solicitors’ 6,419 sq ft at 1 Newhall Street, and two deals at St Philips Place, as well as the aforementioned Cornerblock deals.

City centre fringe locations – are they back?

2024 thus far has delivered on several surprises, but what may be most intriguing are the number of deals being made in the fringe areas of Birmingham city centre.

Over the last 10 years, the percentage of square footage taken within areas such as Edgbaston, the Jewellery Quarter and Aston has proved to be minimal. However, in the first three quarters of 2024, 44% of the year’s take-up has been completed in these fringe areas. The figures for this calendar year are particularly close thus far, with a 319,137 sq ft total for fringe and 398,347 sq ft for the city centre.

Again, the 189,053 sq ft, 10 Woodcock Street sale does account for 59% of this total, yet even with this uncommon deal discounted, the numbers remain high. Without the 10 Woodcock Street transaction, fringe’s take-up in 2024 would still comprise 130,084 sq ft. This is above the 5-year average by a considerable amount. Even the area’s most lucrative years, 2020’s 96,241 sq ft total and 2023 with 94,932 sq ft, are far behind 2024, with a final quarter still to be factored in.

Strong Q3 re-establishes smaller deals in 2024

Smaller deals are once again showing their popularity within Birmingham city centre. In Q3, 12% of office space taken was in the 2-5,000 sq ft bracket, for a total of 41,961 sq ft. This accounts for 56% of the bracket’s sum in the first three quarters of 2024.

Furthermore, 74% of Q3’s deals (by number) were made in the 0-5,000 sq ft bracket, with only six of the quarter’s transactions being made above 5,000 sq ft. This brings the sum of 2024’s 0-5,000 sq ft transactions to 48 – 68% of the year’s total.

After a quieter first half of the year, this quarter has re-established the smaller deal share for 2024. Year-on-year numbers now remain consistent, with a strong second half potentially creating the size band’s healthiest share in five years.

Conversely, the 20,000+ sq ft bracket only comprises 7% of 2024’s transactions thus far – a drop from the improved 9% share across 2023. This may beg the question as to whether businesses are once again looking to downsize or shift methods of operation in a post-pandemic world. Although many teams have returned to more office-based lifestyles, hybrid working remains on-trend. This is evidenced by the number of companies seeking better quality space whilst reducing the size of their requirement – as a trade-off.

Outlook for Birmingham office market 2024

Curzon Street Station – On the 10-year anniversary of HS2’s occupancy of Two Snowhill, new CGI images have been released to highlight adjustments in the Curzon Street station design. The improvements include a more efficient concourse layout, increased cycle storage, accessibility enhancements and better landscaping, seating and lighting options.

City centre redevelopment project – A masterplan has been submitted to redevelop the former Axis Square area of Birmingham city centre. Whilst the plans are centred around creating 990 new homes and a public food hall, the influx of further city centre residents is sure to enhance Birmingham’s already well-established professional talent pool and increase business opportunities within the area.

New CBD refurbishment completes second phase – Upgrades to Fifteen Colmore Row have been finalised, including a new concierge and lift reception area, as well as a 7,000 sq ft restaurant opening as part of the ground floor.

What’s next?

The education, recruitment and training sector will remain a point of great interest heading into the year end. Considering the sector’s flexible nature, moulding operations easily to fit most offices, substantial space could be taken in Q4.

Both the fringe areas of Birmingham city centre and the smaller deals markets had strong Q3 performances. An equal fourth quarter output would provide great insight into potential trends for 2025.

Heading towards the new year, the Colmore Business District will have more opportunities to lease a variety of space as refurbishments at 19 Cornwall Street and 35 Newhall Street near completion.