Office space Birmingham city centre – quarter 1 2015 take-up

The first quarter’s transactions for office space in Birmingham city centre confirm a good start to the year, with 129,403 sq ft across 29 deals – 26% up on last year, with average letting size also up 22%. The strongest first quarter since 2010, with a number of sizeable transactions, the figures reflect higher activity levels within Birmingham companies and increased business confidence.

Increased activity levels drive recruitment and expansion of office space

A similar picture to that we have seen in Solihull and the M42 corridor, a good number of the deals this quarter are occupiers taking additional office space as they expand to accommodate new staff:

• In the second largest deal of the quarter, Michael Page recruitment specialists expanded their offices in Brindleyplace by a further 15,960 sq ft at no. 4.
• Pennycuick Collins took an additional 5,359 sq ft at 54 Hagley Road offices in Edgbaston.
• Optics specialist Carl Zeiss – a further 3,818 sq ft at 22 Gas Street.
• Santander Bank – a further 2,377 sq ft at 1 Cornwall Street.

This trend of incremental expansions is one we’ve seen emerge right across the greater Birmingham office market, as companies take additional office space, as a medium term measure, to accommodate new staff as they see growth within the economy and demand for their business.

Recruitment companies are the winners

Understandably, it is the recruitment-related companies who are dominating the transaction statistics this quarter – 28% of deals and 24% of square footage:

Next most active sector is property-related

Companies in Birmingham’s property-related sector have also been active, taking 21% of the office space transactions, and 29% of square footage – including the largest deal of the quarter at Neville House in Edgbaston, where we believe the purchasing of the space by the property investor, Fast Item, has been done with the intention of turning it into serviced offices:

Refurbishment of office space brings lettings

In Q1, we also see, across quite a number of the transactions, how the refurbishing of office space in Birmingham generates lettings and increases property owners’ return on investment.

• KWB has seen this at first hand with their recent lettings at Lancaster House, completed within just 4 months of the refurbishment – Bell Cornwall Recruitment, 2,300 sq ft, and CWA civil engineers, 3,300 sq ft, both relocating from neighbouring Birmingham Jewellery Quarter.
• Elsewhere, Enterprise House has seen three lettings, to Euler Hermes insurance specialists, MacKenzie Jones recruitment company and marketing services provider Liquid, totalling 8,495 sq ft, after property company Hortons’ Estate carried out a good refurbishment, which was well received in the market.
• 54 Hagley Road, arguably one of the best refurbished office buildings in Edgbaston, let 5,359 sq ft to chartered surveyors Pennycuick Collins.
• 45 Church Street offices in Birmingham city centre is another example of an excellent refurbishment driving consistently good levels of take-up. This quarter, Bellpenny financial advisors took 8,709 sq ft here. As a location, 45 Church Street is set to only improve after the acquisition of 2 Cornwall Street by Bruntwood. The fact that these offices have lain empty since KPMG relocated some years ago, has previously put off occupiers from relocating to the immediate area. Bruntwood’s plans to refurbish the building will act as a catalyst to draw occupiers to this part of the city.

Edgbaston office space takes two of the top three deals

Securing two of the top three deals this quarter, offices in Edgbaston represent good value as office rents in Birmingham city centre start to push up. The sizeable transactions included the aforementioned 19,656 sq ft at Neville House and 5,359 sq ft at 54 Hagley Road, as well as 9,584 sq ft to BMG Research at Greenfield Crescent. Next quarter will see the announcement of another large transaction for office space in Edgbaston.

HSBC signing is first of a number of significant office lettings in Birmingham

HSBC’s much publicised 210,000 sq ft of new build office space at Arena Central has been signed, although not yet reflected in this quarter’s figures. As previously said, this announcement is huge news for Birmingham, creating 1,000 new jobs for the city, and expected to bring a boost of £121 million to Birmingham’s economy every year. A great advertisement for Birmingham, it represents a relocation from central London, which won’t be the last.

In addition to this, we expect a number of other significant deals of almost the same magnitude to be announced shortly, as well as news of signed pre-lettings during the course of this year for the schemes at 3 Snow Hill and Paradise. Exciting times lie ahead.

See full details of the transactions for office space in Birmingham city centre and Edgbaston.

For more information, please contact Mark Robinson on 0121 212 5994 or email mrobinson@kwboffice.com.