Office space Birmingham city centre – full year 2013 review

The full year tally of transactions for office space in Birmingham of 664,147 sq ft puts 2013 totally in line with the long term average.

Although there were five transactions less in 2013 than in the previous year, total square footage was up by 33% with an average transaction size of 5,189 sq ft. Despite this being buoyed by the Deutsche Bank move into 134,000 sq ft in 5 Brindleyplace, the figures demonstrate consistency and confidence from larger occupiers looking to expand.

Even without the Deutsche Bank transaction, average transaction size for offices in Birmingham was still up by 11% to 4,174 sq ft. Despite the year starting with a slow first quarter, the second half of the year was much stronger – a trend that we have seen now for the last couple of years for office space in Birmingham city centre. This may be attributable to lease events or business confidence – or both.

Major occupiers expanding office space in Birmingham signals confidence

A good number of local occupiers have all expanded during 2013, evidence of confidence in local business rather than being too London-centric – and they’re recruiting as well. Deutsche Bank is a great accolade for the local economy, showing that they can recruit key staff and prosper here. Other examples are:

  • Wesleyan – additional 5,082 sq ft in Colmore Plaza
  • Allianz (Trinity Park, Solihull) – additional 15,000 sq ft in Colmore Plaza
  • Irwin Mitchell – expanded again within Imperial House, Temple Street by a further 5,148 sq ft
  • DWF LLP – relocated into 22,627 sq ft in One Snowhill in Q2 and then expanded into a further 3,073 sq ft in Q3
  • Housing 21 – both consolidated and expanded into 24,850 sq ft in Tricorn House, Edgbaston
  • DAC Beachcroft – re-geared and expanded by occupying an additional 4,351 sq ft within 9 Brindleyplace
  • VAX – additional 13,994 sq ft in 2 Colmore Square

Three business sectors dominated transactions for office space in Birmingham

If we analyse 2013 transactions by business sector, then (putting Deutsche Bank to one side for a moment) training & recruitment,insurance and property were the ones to watch, accounting for 42% of the market by both square footage and number of transactions for office space in Birmingham. The remaining 58% was peppered with the normal professional services companies, most notable being the legal sector with 7% of the market. Indeed, DAC Beachcroft is likely to expand further in 18 months’ time – this cautious approach to their office space requirements being evidence of their not wanting to make a wrong decision.

Within these key sectors, the movers were:

TRAINING & RECRUITMENT Sq Ft
JTL Training 20,856
Finance Business Training (FBT) 16,400
Crackerjack Training 6,702
Finance Business Training (FBT) 6,250
AAA – apprentice training providers 5,750
Finance Management Business School 4,911
First4Skills 4,068
Intraining 3,606
Pure Staff 3,600
Allegis Group 2,682
Impellam Group 2,672
Midas Selection 2,643
Connex Recruitment 2,600
Speedline Training 2,330
Shaw Trust 2,281
Innovate Learning Centre 2,220
City Year – education 2,150
The People Place 1,700
BCL Legal 1,433
Jubilee Personnel Services 1,272
PeopleLine 1,250
Carlisle Staffing 1,175
IEM Communications 785
YFR 702
Temp Labour 700
Smart Recruitment 595
Total 101,333
Share by sq ft 15%
Share by number of transactions 20%
INSURANCE Sq Ft
Legal & General 33,460
Allianz 15,000
Marsh 11,455
JLT 10,426
Oval Insurance 7,422
Towergate Fusion Insurance 6,427
Honour Point 4,273
Argent Liability Adjusters 1,600
Assicurazioni Generali 1,081
Markel UK 439
Total 91,583
Share by sq ft 14%
Share by number of transactions 8%
PROPERTY Sq Ft
i2 Business Centres – serviced office provider 24,000
Amber Real Estate 8,500
Ryder Levett Bucknall 7,307
Carillion 6,250
Nolan Associates – civil engineers 5,375
Glancy Nicholls Architects 5,283
Gleeds – construction consultants 4,300
Bruton Knowles – commercial property agents 3,670
Railway Paths 2,934
GB Partnerships 2,686
Birmingham Properties Group 2,680
Chapman Bathurst 2,235
S&P Architects 2,022
Shepherd Construction 2,000
Chatham Billingham – investments 1,526
Bluu Solutions – fit out specialists 1,389
Centrick Property 1,072
Shortland Penn & Moore – commercial property agents 456
Total 83,685
Share by sq ft 13%
Share by number of transactions 14%

Future outlook for office space in Birmingham

However, only 6 transactions of the 128 in total for offices in Birmingham were over 20,000 sq ft. All the large lease breaks and expiries over the next two years are still to take place. If these occupiers can be tempted to move by way of a pre-let or to take the last amount of Grade ‘A’ office space, we should expect to see larger requirements coming through. In Manchester, pre-lets are much more commonplace, with 190,000 sq ft of office space transactions more than Birmingham in 2013.

The short supply of Grade ‘A’ office space in Birmingham will mean slim pickings for occupiers and a prediction of running out of options by the end of 2015.

Those occupiers looking to move into Birmingham city centre or to relocate into the ‘core’ are choosing to move into better quality office space that provides greater workplace efficiencies. For example:

  • JLT moved from three floors in Temple Court into one floor in 45 Church Street.
  • Allianz has occupied a single floor in Colmore Plaza (if this was out-of-town, they would have needed a self-contained building).
  • Housing 21 with their requirement for c. 25,000 sq ft – Tricorn House in Edgbaston was the only large floor-plated building available in this market.
  • Melrose moved from offices in Alcester to Colmore Plaza.

Occupiers will be driven to look at pre-let opportunities for offices in Birmingham

As occupiers move and take up Grade ‘A’ office space within Birmingham city centre core, they erode the space available in these buildings on a floor-by-floor basis – 45 Church Street is a good example of this. This means that even though a supply of Grade ‘A’ office space remains, there are only a couple of opportunities for 40-50,000 sq ft. Ultimately, this may drive occupiers to look at pre-letting opportunities, and hence we are starting to see press coverage for schemes such as:

  • Lumina – proposals have been submitted to build a new 15-storey, 240,000 sq ft office block on Snow Hill Queensway.
  • Peat House/2 Cornwall Street – West Register will demolish this building and replace it with a 13-storey, £40m office building.
  • 55 Colmore Row – 160,000 sq ft.
  • 55 Temple Row.

Opportunities for good quality Grade ‘A’ refurbished office space in Birmingham will emerge

For those occupiers that want good quality Grade ‘A’ refurbished office space in their drive to become more efficient, there are a number of opportunities coming to the market. Most notable is 7 New Market Street where Constantine Land is seeking pre-let enquiries.

As larger occupiers relocate, the availability of refurbished opportunities will present themselves. However, there is a degree of stagnation at the moment as the plans for Paradise Circus are waiting for Birmingham Conservatoire to act. Once this development goes ahead and occupiers relocate to take up space, so the buildings they move out of, like 3 Brindleyplace, can all be refurbished and re-let.

Office space in Edgbaston represents good value with growing amenities

Generally, confidence would seem to be emerging from occupiers across the board, with more certainty attached to a relocation than previously. The market certainly seems more active, with less tentative enquiries and a greater degree of certainty behind them.

Offices in Edgbaston have found their level and improved as places to relocate or expand within, hence almost level pegging with the Jewellery Quarter in terms of the number of transactions for office space. However, the types of occupiers are very different with the creative sector preferring office space in Birmingham Jewellery Quarter.

Nevertheless, Edgbaston is recognised as representing good value with an improved amenities offering due to the Morrisons supermarket addressing some of the concerns previously labelled against the area. Calthorpe is looking to implement the next stage of the master plan – growing the amenities offering close to Simpsons with more restaurants and a Costa Coffee drive-thru.

Office space transactions by: Number % Sq ft %
Birmingham city centre 84 66% 515,660 78%
Jewellery Quarter 21 16% 44,859 7%
Edgbaston 19 15% 76,024 11%
Digbeth 3 2% 6,748 1%
Aston 1 1% 20,856 3%
Total 128 100% 666,147 100%

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.