As we see the Birmingham office market continue to experience a significant upswing, we caught up with Charles Warrack, our Head of Office Agency, to find out why he is forecasting a robust continuation of growth for the remainder of 2024.
This positive outlook has been reinforced by the latest political changes after the General Election, coupled with the expected reduction in interest rates. In the second quarter of 2024, central Birmingham’s office market witnessed a substantial uptake, with 168,512 square feet being snapped up across 29 transactions. The public sector emerged as a major contributor to this surge, highlighted by a notable lease at Three Snowhill, which accounted for 58,697 square feet.
Building on the momentum from the first quarter, which saw 19 deals totalling 200,282 square feet, the year-to-date figures have reached an impressive 368,794 square feet over 48 deals.
Charles, one of our partners based at our central Birmingham office on Colmore Row, remains confident that this positive trend will be maintained as the city centre remains an attractive location for a mix of sectors. Reflecting on the year’s first half, he said: “We have seen a commendably strong start to the year, drawing inspiration from surpassing last year’s office take-up for the same period. The previous year concluded with the highest annual total in the post-pandemic era.”
Despite being four years removed from the pandemic’s peak, its impact, coupled with the shift towards home and flexible working arrangements, is still influencing the market. However, the current figures are nearly on par with pre-pandemic levels, signalling a resilient market.
“The recent dip in interest rates is seen as a positive sign, potentially spurring further demand for office spaces. The Labour Party’s convincing victory has instilled a sense of stability nationwide, fostering confidence among businesses of all sizes and sectors to invest or lease properties, which is expected to translate into more office transactions in the commercial sector.
“We are expecting a steady increase in deals in the office market, and we would expect to see further increases in Q3 and Q4 this year. “Birmingham is bustling with activity, and the sentiment at networking events is highly encouraging.”
The demand for high-quality office environments and amenities remains strong, as employers continue to embrace a hybrid-working model. Charles added: “We are certainly seeing a two-tier market where there’s ‘flight to quality.’ Occupiers want better space and that is because they need the ability to tempt staff back from working from home full-time.
“There is no doubt that employers are going down the route of sourcing better accommodation and that is leading to a requirement for larger plots with add-ons such as shower facilities and cycle storage areas as well as nearby coffee shops and gyms where possible.
“The quality of the fit-out and amenities is becoming increasingly important in the commercial property sector to keep up with tenant demand and expectations, and we are expecting that to continue.
“We are seeing more tenants willing to pay higher rents with the average prime headline rent in Q2 being circa £45 per sq ft.
“There’s clear proof that tenants are prepared to pay the higher range in the market for the right accommodation which will help to attract and retain staff.”
