Birmingham office market research – quarter 2 2016

A very respectable quarter 2 performance pushes the half-year total for 2016 to just over 500,000 sq ft – representing over 85% of the annual average take-up for offices in Birmingham city centre.

Our latest Birmingham office market research confirms that, in Q2 2016, office space transactions totalled 217,295 sq ft for Birmingham city centre and Edgbaston – in a quarter that saw the country vote to leave the European Union. Total transactions in HY1 2016 for offices in Birmingham city centre were 500,992 sq ft, a statistic achieved despite the EU referendum – however, the true impact of the ‘Leave’ outcome on commercial property is unlikely to be reflected in the transaction figures until 2017.

Highlights of Birmingham office market research

  • Enquiry levels drop but effects not likely to appear until Q3, at the earliest
  • Corporate office consolidations to continue to provide market with large lettings
  • Expansions show Birmingham business doing well and growth in employment
  • SMEs trading well but likely to be ‘quieter’ in the market
  • Birmingham office market begins to see fresh large stock, as refurbishments complete
  • Outlook for 2016 – a year of two halves

A great quarter – thanks to 2015 enquiries

The quarterly total of 217,295 sq ft was bolstered by the largest letting of the quarter – 83,406 sq ft at Baskerville House, to house the consolidation of Network Rail.

The current drop in new enquiries for offices in Birmingham city centre is not evident in the Q2 transaction figures. This is due to deals that were agreed pre-Brexit still going through.

Deals that were agreed pre-Brexit come from enquiries that were generated in the latter half of 2015 – a prosperous year for the Birmingham office space market – and so do not represent the post-Brexit office market.

The average letting size in the quarter – 5,432 sq ft – whilst still a decent size, is less than the previous quarter’s 7,880 sq ft. However, this is due to a healthy number of smaller transactions, indicating that the activity is at the lower end of the market – where working capital is lowest and most sensitive – so a great sign for Birmingham’s economy.

Network Rail and office space consolidations

The standout letting, that kicked off the quarter, was Network Rail’s consolidation into Baskerville House. The 83,406 sq ft transaction made good financial sense for Network Rail, as they bring together multiple office locations, including their substantial stake at The Mailbox.

This consolidation allows them to achieve better cost efficiency – reducing the overall square footage they occupy and, with that, also reducing the running costs of their headquarters office operations.

Technology company, Catapult, who took 18,974 sq ft at Cannon House, is another prime example. Having been based in Solihull on Birmingham Business Park, Catapult made the decision to move all of its outlying offices into a prime, Birmingham office space location. Cost efficiency, compounded with increased connectivity and aspirations of occupying a prestigious city centre office building, motivated the relocation. The move will see the company maintain the number of employees, yet reduce the square footage of its overall office space stake in the region by 25%.

Lettings such as these give an excellent foundation to the quarterly, and annual, figures for offices in Birmingham city centre. The benefits of consolidation have made it a popular trend, at the corporate level; we anticipate that, irrespective of Brexit, this will continue, and thus the market will continue to see lettings of this size – and even bigger.


In Q2 2016, the market for Birmingham city centre office space also saw a number of lettings that represented expansions – see table below. Office space expansions are great news for the city, not just for the individual companies themselves. Expansions indicate employment growth, as well as the prosperity of Birmingham business, despite the uncertainty surrounding the EU referendum. To see commitments to additional office space being made, at this time, shows Birmingham to have had, in Q2, a healthy and growing economy and commercial confidence.

CompanyLocationOffice space (sq ft)
Highways AgencyThe Cube5,410
AXASt Phillips Point5,400
Royal & Sun AllianceInterchange Place5,092
Allegis11 Brindleyplace4,400
Handelsbanken2 Colmore Square2,494
HilcoCheltenham House700


The court services company continued its program of reshuffling its office operations with two lettings in Q2 2016 into 10,666 sq ft of office space at Centre City – having taken 25,600 sq ft in the same building in Q1 2016. When taking into account the 8,965 sq ft they took at Livery Place in Q4 2015, Ingeus has taken a total of over 45,000 sq ft in the past 9 months.

SMEs and Brexit

Both anticipation of the referendum and the ‘leave’ outcome have caused SMEs to ‘quieten down’ within the office space market. However, these businesses are still fundamentally well placed and trading well. The strength of the economy, built up since the end of the 2008 recession, remains and, for the time being, that momentum is continuing. In light of this, enquiries may begin to pick up – as companies begin to see where they now stand, both within their supply chains and the wider business world. We do expect to see a fairly quiet third quarter, particularly from SMEs, save for those who have to action a lease event by the year end.

In respect of Brexit’s general impact on the office market, the idea of ‘uncertainty’ is very much still in place, despite us now knowing the outcome of the referendum. In order for companies to know where they stand, going forward, the political and financial areas need to stabilise.

Office space availability

In recent years, the demand for offices in Birmingham city centre caused a significant dip in overall supply. The market’s response was two-fold; in the long term, we have seen the return of cranes to the city, marking out several new-build office space developments, and in the short-medium term, large scale refurbishments to plug the quality gap, went underway. We are now seeing some of these refurbishment projects reach completion – such as 1 Colmore Square and 10 Temple Street – providing the market with much needed fresh stock, which in itself can stimulate interest in the market. The investments made in refurbishing 1 Colmore Square, have enabled the quoting rents on the property’s office space to rise by £2-3 per sq ft.

Despite the increase in rents, companies are likely to save elsewhere on their operating costs; refurbishments that make considerable improvement to a building’s EPC rating can have a drastic impact on energy costs and service charges.


The construction industry is likely to be adversely affected in the mid-term only. Developments that are underway as of now will carry on, and Birmingham has some excellent prospects in that respect, most notably Paradise. The contractors that Argent has appointed, will still deliver on their commitment of completion, scheduled for 2018.

On a national scale, in the next 6-12 months some schemes may be put on hold, whilst the political decision making is taking place. What projects this could impact we are not able to anticipate – but we would foresee a delay to these projects, rather than a permanent shelving.


Uncertainty remains the theme. Whilst deals that were agreed pre-Brexit are still going through, the lack of stability in the financial and political sectors will mean that enquiry levels may remain low for some time. We anticipate a slow descent over the next 6 months in the rate of office space transactions being secured, giving us a year of two halves; the strong first half of the year for offices in Birmingham city centre will mean that the market achieves over the annual average level of take-up, but 2017 is likely to give us a clearer picture of the initial impact of Brexit upon the country’s office markets.

See full details of the transactions featured in our Birmingham office market research, comprising office space in Birmingham city centre and Edgbaston.

For more information, please contact Mark Robinson on 0121 212 5994 or email