The Cost of Office Space in Birmingham 2023

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The latest figures show that take up across Birmingham was 176,984 sq ft which represents a 23% drop against the 10-year average. Market performance was slightly better when looking at deals in the city centre with activity only 11% below the 10-year average.

Birmingham has seen a flurry of activity at the end of 2022 but at the start of 2023, the economic landscape is influencing the market and this has led to take-up falling to its lowest point since the middle of 2021. Activity has been focused on the core of the city which is influenced by an appetite for high-quality space. Flexibility is still at the top of many occupiers’ agendas as they are seeking more flexible space and lease terms.

Prime rent in Birmingham

Prime rent in Birmingham currently sits between £40-£41 per sq ft and there is confidence that top rent will reach £42 during the year. This is based on the 19% prime rental growth experienced in Birmingham since 2019.

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The cost of office space in Birmingham 2023

These costs are a guide provided by local commercial property experts and rent reports. Costs are updated each quarter, and are subject to change.

Vertical market activity

The most active sectors this year are Public Services, Education & Health with transactions across these businesses accounting for 49% of total take up. There is also an increased demand from higher education institutions such as QA and Aston University who took a combined 72,000 sq ft in separate deals earlier this year.

Insurance & Financial Services was the second most active sector and accounted for 19% of demand. AON recorded the largest deal with their 23,000 sq ft relocation to The Colmore Building.

Demand for Grade A space

Recent figures show that 100,000 ft of space transacted was Grade A and equates to 65% of the overall total for Birmingham. Grade A demand has accounted for 72% of take-up in the past five years and market trends show that this weighting towards tenants taking prime space will remain.

The latest availability figures for Grade A space in Birmingham show 445,000 sq ft of available space in key buildings such as 10 Brindleyplace, One Centenary Way and 103 Colmore Row. Based on the current demand for Grade A space, the availability of Grade A space is ~2.5% which is predicted to be equal to 0.9 years of supply and is the highest availability of all major cities.

What tenants want

Organisations are currently focusing on two things: taking quality space and agreeing to more flexible terms. The increasing demand for flex space from corporate users is likely to influence the expansion of more flexible offices in the city due to the current and predicted demand. This is likely to affect the cost of office space in Birmingham and similar trends will affect prices in other big cities.

ESG has become the word – or acronym – on everybody’s agenda. Commercial property agents, landlords and occupiers alike are all assessing the relationship they have with their teams, how they use their office space and how this affects their property strategy. Environmental, Social and Governance (ESG) has become an ethical priority for occupiers, enabling them to enhance their corporate decision-making and, as one of many benefits, make their organisations appealing to existing and potential talent.

Another key trend behind this activity is that more companies are relocating from London to Birmingham to set up their offices. This shift is helping to diversify the city as an increasing number of national and international firms are choosing to open major offices in Birmingham. With a broader range of occupiers being reported in the quarterly transactions, the resilience of the market is being proven; something that has been previously acknowledged in Solihull and the M42 corridor.

The outlook for Birmingham office space

As companies continue to rationalise their space, landmark properties like 103 Colmore Row have demonstrated the pull of high-quality office space, with several businesses opting to reduce their space and relocate to the impressive new property.

The delivery of 400,000 sq ft of new space at Enterprise Wharf and One Centenary Way is also an important addition to the Birmingham market with an additional 287,000 sq ft expected to complete this year. Following the refurbishment of 10 Brindleyplace, the property provides an additional 210,000 sq ft of Grade A space which includes a 27,000 sq ft flexible co-working space. This type of scheme is providing new amenity-rich space to tenants in Birmingham’s city centre.

Another important addition to the Birmingham commercial property market is the work that has begun at St Philips Point in Temple Row. This £5.5 million refurbishment of an existing office building in Birmingham’s business district will provide 65,000 sq ft of Grade A workspace over 10 floors. Renamed Arca, this building will be another state-of-the-art office building which will provide tenants with quality amenities and end-of-trip facilities.

For further advice on the Birmingham office market, our regional workplace experts can guide you through both tenant and landlord markets in greater detail.

The Birmingham Office Rent Report 2023

Our market overview and insights are designed to assist you with your office search in Birmingham.
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