Market Insight

More high-quality office space needed to meet Birmingham demand

June 20, 2023
120 Colmore Row, Office, Birmingham, Estilo Interiors.
The Birmingham office market improved significantly in 2022, ending the year some 44% up on 2021, with the number of transactions in line with the five-year rolling average once more.

Post-pandemic pent up demand has resulted in a flight to quality, as occupiers continue to seek to attract and retain talented workforces back into Grade A office space.

The major mixed-use developments at Paradise, Arena Central and Snow Hill continued to drive this trend, offering high quality space and have played a significant role in attracting major occupiers, whilst also bringing some back into the city from out-of-town locations.

With Goldman Sachs taking 110,000 sq ft at One Centenary Way and RSM committing to 12,132 sq ft on the tenth floor at 103 Colmore Row to new pipeline office schemes due to come through at Smithfield, around Eastside and in Digbeth, the future looks promising.

However, despite the delivery to market of lots of new build Grade A office space at the likes of 103 Colmore Row and Paradise, we are starting to see availability of smaller high-quality, amenity rich space dwindle in the UK’s second city.

This is particularly true in the sub-5,000 sq ft range, where SMEs want a smaller office footprint than the large corporates, but the same level of quality.

Of course, Birmingham boasts a fantastic array of serviced offices which do provide high-quality, amenity-rich office space for smaller teams at locations like x+y, Regus, WeWork and more.

Serviced offices, with all their occupier bells and whistles, absolutely have their place, but some occupiers still want to take a traditional office lease, with the flexibility and brand benefits that having their own space brings.

However, many lack the time or capital to fit out their own space and therefore want a quick, fully fitted, flexible option with grow-on space which allows them to articulate their brand values though their office, rather than simply living the values of their serviced office provider.

This is leading many landlords to invest in the delivery of category A plus (Cat A+) office space, and we are seeing many more fitted solutions come to market which are being leased quickly – over and above their unfitted counterparts.

Landlords therefore need to invest significantly in the refurbishment of existing stock now, to meet current demand and secure quality tenants for the next 3-8 years, whilst we await the delivery of new stock to market.

Such is the flight to quality that we are seeing some buildings not let because the quality is no longer deemed good enough by the post-pandemic occupier – despite having been refurbished in the last 5 years.

Refurbishment of 120 Colmore Row, Birmingham

Some astute landlords are already investing in their assets to address this, such as at Newater House on Newhall Street, where our clients Nurton Developments and Hortus are undertaking a significant refurbishment project.

The refurbishment will not only provide brand new M&E, concierge reception communal focus pods and meeting booths, but will incorporate fully fitted, Cat A+ floors.

Nurton benefits from having undertaken a similar step at 4 Temple Row which, despite a high quality refurbishment, lost out to other buildings in the market. Following Cat A+ refurbishments to the vacant floors, however, the building is now almost fully let.

120 Colmore Row is another great example of how an older asset has been refurbished to a high standard, providing fully fitted plug and play space which is now letting up and competing directly with serviced office providers in the city.

So, as we await the delivery of further new-build office space, what should landlords consider as part of a refurbishment project?

The first thing to do, is move away from thinking about net lettable areas, in favour of providing more amenity rich communal spaces.

Occupiers want to provide some of the working from home comforts, together with traditional desk space and meeting rooms, Zoom booths and collaboration space for more creative thinking.

This is exactly what Estilo Interiors has been delivering in Birmingham, as Lucy Hansell, explains:

A CAT A+ fit-out sits between CAT A and CAT B standards, providing tenants with a ‘plug and play’ workspace. It offers added features of a practical CAT B fit-out while reducing the burden of otherwise prohibitive CAT B fit-out costs.

“Cat A+ spaces have become increasingly popular among SMEs and start-up enterprises as they provide an alternative to coworking spaces. They offer the chance to have an independent space with its own ‘front door’ and flexibility to express brand identity.

“We believe the office is still an integral manifestation of brand and culture and Cat A+ is no longer a fad or passing trend but a concept that is here to stay, offering numerous benefits to both tenants and landlords.”

Lucy Hansell, Estilo Interiors, Birmingham.
Lucy Hansell, Estilo Interiors.

Of course, integral to any refurbishment project should be a building’s environmental credentials, particularly as the implementation of the next phase of the Minimum Energy Efficiency Standards (MEES) regulations is now here, requiring all rented commercial property to have an energy performance certificate (EPC) rating of band ‘E’ or better.

Failure to achieve a rating of band ‘E’ or better (or to hold a valid exemption) will see landlords face potential fines of up to £150,000.

With this in mind, it is vital to consider how to build in energy efficiency improvements into your refurbishment project – from LED lighting and more efficient heating systems, to the potential to install rooftop solar PV.

If you are considering a refurbishment project, it is important to understand what the potential is in your building.

Our building surveyors can come and review your asset, advising you on some of the ways you can achieve the standard of office that occupiers want.

Working in collaboration with trusted contractors and fitout companies, we can then support you in the delivery of this, project managing the fitout process on your behalf, as well as marketing and letting the resulting space.