Birmingham office market research – quarter 4 2017
Q4 2017 delivered the highest number of transactions recorded in a single quarter for the Birmingham office market. The deals that make up the quarter, which totalled 354,530 sq ft, show an ideal range of activity which is not dependent on a particular size bracket – implying a sustainable market.
Traditionally, the Solihull and M42 office market has been exemplary as far as sustainability is concerned, owing to the wide range of occupiers interested in taking office space in the area. Conversely, the Birmingham office market, particularly that of the city centre – which almost exclusively sees lettings to the service industries – can be a lot more susceptible to changes in the local market and wider economy.
Regus displays confidence in demand for serviced offices
In Q4, Regus took a total of 109,293 sq ft of Birmingham city centre office space across two lettings –76,000 sq ft at The Crossway on Great Charles Street and 33,293 sq ft at The Lewis Building. This large amount of take-up represents nearly a third of the quarter’s total.
It is thought that some of the acquired space will be occupied by an HS2 contractor, in a similar arrangement to that of Instant Offices for Capita, Kier, Laing O’Rourke and Fusion.
Occupiers playing pivotal roles in the initial stages of HS2’s construction require office space in Birmingham city centre. However, these contracts – for the time being – are shorter than a typical lease term. To combat this issue, contractors are taking managed office contracts for the length of the initial projects that they have been instructed on, with the managed office operator taking the true lease on the commercial property.
Regus is now one of the largest occupiers in the Birmingham office market, with well over 200,000 sq ft across the city’s core. With this 109,293 sq ft of space being newly invested in, it’s hard to imagine that this will have been without the promise of significantly sized occupiers being interested in signing up.
Serviced and managed offices
In addition to Regus, Q4 saw other serviced office operators take space, wrapping up a year which has seen nearly 20% of a record level of take-up go to such companies.
Alpha Works has expanded its serviced office operation within Alpha by a further 7,100 sq ft – bringing the total size of Alpha Works to 21,300 sq ft – representing 3 whole floors of the building.
MSO Workspace has taken 9,843 sq ft at 11 Brindleyplace in its first foray into Birmingham city centre. MSO has simultaneously also taken a similar amount of space, 9,584 sq ft, at Radcliffe House in Solihull.
Local business booming
Expansions in Q4 2017, and across the year, show that businesses are doing well in Birmingham city centre.
PWC’s additional pre-let of 58,631 sq ft at Two Chamberlain Square demonstrated great confidence in the city’s economy, with the accountants having already taken 90,000 sq ft at the property currently under development at the Paradise site.
Automotive marketing company, Spark44’s notable success has been exemplified in this quarter as it expands, taking 14,176 sq ft at Norfolk House, in addition to the existing 18,718 sq ft of space it has occupied since 2015.
Two Chamberlain Square (left) and 55 Colmore Row (right)
As discussed in our full year review, this quarter has added significantly to the tally of inward investment transactions for the year, in which we have seen a flight of people into Birmingham city centre for the first time, a prime example being the RICS.
RICS, the membership body which regulates the surveying profession as a whole, had its West Midlands regional offices at Westwood Way Business Park in Coventry, but has now relocated into 30,808 sq ft at 55 Colmore Row offices in Birmingham city centre.
Other examples of inward investment this quarter include:
- Insurance software specialists, Acturis, which took 6,302 sq ft at Edmund House. With a number of insurance firms also taking space in the quarter, it is possible that this was motivated by the desire to be closer to clients or potential clients.
- St Joseph Homes, part of the Berkeley Group, which took 4,750 sq ft at 9 Colmore Row. The company had been considering Solihull but made the decision to take space on Colmore Row in order to be closer to agents and developers.
- Trinity Mirror which took 4,235 sq ft at Embassy House, relocating from Fort Dunlop. It is thought that the desire to make the commute into and from work easier for staff was a key motivation for the move.
Bruntwood’s success at, the 110,000 sq ft, Cornerblock continued through Q4, securing 20,522 sq ft across 5 lettings. The total square footage let at Cornerblock in 2017 is 85,598 sq ft, meaning that the property is fast approaching the point of being fully income producing.
|Occupier||Size (sq ft)|
|Slater & Gordon Lawyers||6,550|
As examined in our previous research publications this year, the success of Cornerblock is rooted in the level of flexibility being offered on office space that is both of a high quality and ideally located.
Bruntwood is understood to have taken an aggressive approach to negotiations with occupiers interested in Cornerblock, following the reintroduction of the property to the market. It is thought that incentives such as shorter lease terms, rent-free periods and lease breaks will have been on the table, and the popular response to this has, in turn, generated additional interest.
See full details of the transactions featured in our Birmingham office market research, comprising office space in Birmingham city centre and Edgbaston. Also, see our in-depth analysis of the year in full.
For more information, please contact Mark Robinson direct on 0121 212 5994 or email firstname.lastname@example.org.
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