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22nd Oct 2021|News|

4 reasons the Birmingham office market is returning to normal

The central Birmingham office market shows some semblance of returning to normality.

That is the tentative conclusion suggested by the latest take-up data from the Birmingham Office Market Forum (BOMF), which showed the city edging toward pre-pandemic levels of take-up.

Office take-up in Q3 2021 in the central Birmingham office market totalled 243K SqFt in 19 deals. Added to the 253K SqFt accumulated during the first half of the year brings a three-quarters total of 496K SqFt in 63 deals.

The deals make the period the best performing since Q1 2020, which was dominated by BT Group’s signing of the largest-ever letting within a single building in Birmingham when it took 283,000 sq ft at Three Snowhill.

Key deals in Q3 2021 were Arup’s 68K SqFt signing at One Centenary Way, X+why taking 41K SqFt at 6 Brindleyplace, and Atkins leasing 36K SqFt at Two Chamberlain Square.

Arup has signed a long-awaited pre-let deal which will see it move its third largest global office to Paradise Birmingham, bringing 1,000 jobs to the city centre.

By moving from its existing Solihull campus, Arup is the first occupier to commit to One Centenary Way, the latest building under construction at Paradise.

Arup’s new ‘city campus’ will be set across 68,000 sq ft of space over three floors of the new 13 storey building, which is due to complete in early 2023.

This is what you need to know.

1. It’s better than it looks

If you included 109K SqFt of deals that saw office space taken for non-office use or for new concepts that have yet to emerge, and you included a small chunk of floorspace taken by a central Birmingham user in a slightly off-pitch location, the quarterly take-up rises to 352K SqFt.

The Forum, which likes to keep things regular, advises against this kind of maths. But the deals in question undoubtedly ate into office floorspace, albeit for various educational uses, for a yet to be completed hotel-meets-coworking concept and for the Indian consulate.

If you think like the Forum, ignore this. For everyone else, it feels like good news.

2. This is better than pre-pandemic

Q3 2019 was an odd quarter, thanks to occupier hesitations and a hiatus in the supply of new grade-A floorspace. Birmingham Office Market Forum figures show take-up in Q3 2019 at 161K SqFt in 35 deals.

Without the Government Property Agency signing up for 110K SqFt at Platform 21, it would have been an unusually grim quarter.

Even so, the Q3 2021 figure is appreciably stronger at 243K SqFt.

Compare this with the 80K SqFt recorded in Q3 2020 and the trend is clear.

3. The nine-month total is encouraging

The last full year before the pandemic, 2019, yielded a total of 675K SqFt take-up in the first nine months.

This figure makes a more realistic and demanding benchmark for 2021 central Birmingham take-up. The first nine months of 2020 scored 480K SqFt, and the 2021 equivalent of 496K SqFt brings the total a little closer to normality.

By 1 October 2019 the central Birmingham area had seen a total of 90 deals. By the same point in 2020 it had plunged to 37 deals. But in 2021 the deals tally bounced back to 63 deals.

4. The mid-market is back

Deal size also tells a story. Before the pandemic, the 2019 average deal size was 7.5K SqFt. This swelled to 13K SqFt in 2020 as only a handful of larger occupiers pressed on with relocation plans. But 2021 sees the average deal size return to something like normal at 7.9K SqFt. This suggests the mid-market is back in town.

 

In addition to all the above, there was over 109,000 sq ft of alternative uses transacted over four office buildings that did not meet the current BOMF definitions to be included as office take up.

For more information on the Birmingham & Midlands Commercial Market, feel free to get in touch with our team on 0121 289 5009, email commercial@centrick.co.uk or visit us