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.