Birmingham Breaks 1m sq ft

Colliers has just published its latest report on the Birmingham office market.

It reveals that Central Birmingham office take-up in Q4 2017 totalled 354,530 sq ft in 49 deals, taking the annual total past 1 million sq ft for the first time. The total was boosted by the 239,000 sq ft pre-let by the UK Government (GPU) at 3 Arena Central in Q3. The year-end take-up totalled 1,005,072 sq ft in 130 separate deals. Further GPU requirements are also in the pipeline for the next five years as departments including Ministry of Justice and DWP also seek to consolidate and upgrade their regional offices in Birmingham.

Amongst the largest Q4 lettings, IWG (formerly Regus) secured 76,000 sq ft of offices at Crossway on Great Charles Street, as well as 33,300 sq ft of the newly refurbished Lewis Building. Co-working operator iHub signed for 18,000 sq ft at Colmore Gate and MSO Workspace took 9,850 sq ft at 11 Brindleyplace. Serviced office providers are catering for a growing demand from banking, outsourcing and infrastructure clients who seek a flexible occupational solution as a result of investment by HSBC and HS2.  In addition, PwC took an additional pre-let of 58,631 sq ft at Two Chamberlain Square to add to the 90,000 sq ft it took at the scheme in 2016. Metropolis also reported that Spark44 took  14,176 sq ft at Norfolk House and The Princes’s Trust, took 1,773 sq m (18,980 sq ft) of offices at the Beorma Quarter. Recently, engineering consultancy firm WSP signed for 47,000 sq ft of refurbished space at Mailbox for its West Midlands regional headquarters.

On the supply side, Three Snowhill (420,000 sq ft) and 1&2 Chamberlain Square (232,000 sq ft) are due for completion by late 2019. The 42-acre Birmingham Smithfield is due to be redeveloped into over 3 million sq ft of commercial space, and in Edgbaston, there is consent for a £300 million regeneration of a 10.7-acre plot along Hagley Road. by Calthorpe Estates and U+I, known as New Garden Square, which could potentially deliver more than 600,000 sq ft of office space.

Metropolis is monitoring 50 companies searching for offices in the Birmingham area and nearly 60 companies approaching lease decisions over the next two years.

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Birmingham Upswing

A recent report by specialist Birmingham consultant KWB, reveals that the Birmingham city centre office market recovered in the first quarter of 2017 back to normal Q1 levels.

Office space transactions in the first quarter of 2017 totalling 139,000 sq ft – more than 30,000 sq ft over total transactions in each of the third and final quarters of 2016.  The largest deal of the quarter was by Arcadis’ signing for 22,953 sq ft at Cornerblock which is currently being refurbished, followed by iHub’s 18,378 sq ft new base in Colmore Gate. Recruitment specialist SThree Group was also the first tenant to sign 10,035 sq ft at the newly refurbished 10 Temple Street, on the 4th and 5th floors on a 10-year lease.

KWB say that the first quarter of 2017 was very much on a par with that of 2015. Looking ahead, KWB say that the rest of 2017 looks set fair, with the highest level of office development underway in Birmingham city centre for 15 years (1.4 million sq ft), a good supply of top quality Grade ‘A’ space is coming on stream and should trigger some significant office lettings in the coming months. Schemes include 55 Colmore Row
(160,000 sq ft), Corner Block (112,000 sq ft) and the Lewis Building (110,000 sq ft). The much reported HMRC requirement, which has shortlisted Three Snowhill, Arena Central and Post & Mail building, will see a letting of 200,000-300,000 sq ft and KWB also expect the HS2 halo effect to strengthen the Birmingham city centre office market.

Metropolis is currently tracking over 30 medium and large office requirements in Birmingham. Looking ahead, HS2 will have a major pull in 2017. The city has already seen Laing O’Rourke take 11,000 sq ft at 1 Victoria Square in 2016 and engineering firms and consultants are likely  to be a big sector going for office moves this year. In addition, there are nearly 40 tenants which are approaching decisions on lease or office consolidation plans over the next eighteen months.