Birmingham’s office market has seen sustained growth and the most active post-Covid year yet according to strategic real estate advisor Avison Young’s latest Big Nine report.
Covering the final quarter of 2022, the report highlights that the total take-up for Q4 was 273,147 sq ft, 2% above the 10-year average and the third consecutive quarterly increase with the total annual figure being 932,320 sq ft.
Major deals that contributed to the uptick were, Global Banking School – 43,766 sq ft lease at Norfolk House; Mott MacDonald – 30,811 sq ft at 10 Livery St; and Spacemade – 25,731 sq ft at 10 Brindleyplace.
Over the course of 2022, the professional services, financial services and government sectors accounted for 68% of deals within the city core area. This has been helped by a stable availability of space in the market, in line with levels last year after a slight upward movement earlier in 2022.
But there is an undersupply of available quality space, with under one-fifth of total availability being grade A and just five grade A buildings having at least 15,000 sq ft available.
Carl Potter, Principal and Managing Director of the Birmingham Office at Avison Young, said:
“Birmingham has had another strong year in the market and this has only been further highlighted with the increased focus brought on to the city through the Commonwealth Games.
“It was particularly encouraging that the leasing momentum continued into the final quarter. This will set a strong pace for Birmingham’s leasing market in 2023, although the next 12 months will have its challenges, as a consequence of the current economic climate and a potential reduction in investment.”
Whilst there are a number of exciting new completions (both high quality refurbishments and brand new space) during 2023 committed developments further into the future in the city are currently constrained, with the only completion expected in 2024 being the refurbishment of 5 St Philips Place and the next new build scheme expected at 3 Chamberlain Square at MEPC’s Paradise development in 2025.
Charles Toogood, Principal and Managing Director, National Offices Team at Avison Young, said:
“Despite ongoing uncertainty, Q4 saw a healthy level of transactions, marking a 14% increase nationally over the 10-year average, and bringing annual take-up to 8.1 million sq ft. While occupiers sought top-quality workplaces to secure their place in the war for talent, they also continued to reassess their spatial needs, leading to a 19% reduction in average lease size.
“However, several key occupiers, among them the major deals in the quarter, were upsizing, underlining that less space is not the universal answer. Looking ahead, there are some standout schemes in the development pipeline for 2023, including projects such as One Centenary Way in Birmingham, which is already partially pre-let and Bruntwood’s Enterprise Wharf at the heart of the City’s Knowledge Quarter.”