Birmingham’s commercial property renaissance has continued throughout 2021 with upward rents in both office and industrial sectors driven by high demand, lack of supply and workplace transformation.
Property consultancy Vail Williams has produced its Birmingham Property Market Report and believes the city will go on booming as the likes of the Commonwealth Games and HS2 thrust it into the spotlight in 2022.
The report, authored by Regional Managing Partner Carole Taylor and Associate Charlotte Fullard, reviews commercial property activity in the UK’s second largest city from January to October and looks at likely trends for next year.
Carole, who has over 30 years’ experience of the Midlands property market, said: “Birmingham is worlds apart from where it was five years ago and has continued its renaissance throughout 2021, despite the pressures of the pandemic.
“With several new development schemes in the pipeline, the advancement of HS2 and the imminent arrival of the Commonwealth Games to the Birmingham, this uplift is likely to continue to translate into inward investment and office market activity.”
She also cited ongoing infrastructure improvements to expand the city’s traditional central business district (CBD) and schemes including Paradise, Arena Central, Centenary Square and Brindleyplace, plus the high-rise 103 Colmore Row as having a positive effect.
Indicators from Birmingham Office Market Forum revealed that the city office market was returning to pre-pandemic levels.
Carole added: “New development and the refurbishment of existing stock, together with the growth of existing occupiers in the city, is driving the office market here which is attracting a wealth of new occupiers.
“Top tier professional services firms like PwC, DLA Piper and Grant Thornton are expanding their presence in Birmingham, while others, such as Goldman Sachs are investing in the city for the first time. This demand is giving developers the confidence to bring forward speculative pipeline schemes.”
She said that despite the recent ‘work from home’ edict, businesses across the Midlands have been reconsidering their future workplace strategy, with a post-pandemic world in mind.
In the second half of 2021, many firms focused on bringing people back into the workplace and have been transitioning away from full remote working as the vaccination programme continued.
This resulted in a positive turnaround in commercial sentiment compared with the inertia of the previous 12 months. As a result, quoting rents continued to rise, as lack of supply in both office and industrial terms, remained an issue across the Midlands.
Charlotte Fullard said: “Now is the prime time for office occupiers to right-size their premises and consider layout and content whilst making the most of the flexible offers and incentives available.”
“With such demand, landlords of both office and industrial premises should invest in upgrading or redeveloping their buildings and portfolios, to offer the next generation in Grade A space and capitalise on the evolving market dynamics here.”
The industrial and logistics market across the Midlands has remained incredibly resilient, with the pandemic catalysing significant growth across the board, particularly in the warehouse distribution market.
Such is the demand for industrial premises, there are often no existing units available for occupiers wanting a big shed and they are being forced to wait for a new unit to be constructed.
Rental growth for industrial premises continues to be at an all-time high, with Birmingham sitting at the top of the table for annual rental growth across the Midlands, as occupiers find themselves in increasing competition for units.
Charlotte added: “This lack of suitable stock together with the demise of the high street and soaring online retail sales, could create the perfect rental storm for the industrial market, as rents continue to increase.
“Ecommerce, and specifically the urban logistics and parcel delivery companies, continue to drive the mid-sized and big box industrial property market, as do manufacturers with lots of development for this market too.”
Based at Edmund House in Newhall Street, Vail Williams has operated in the Midlands commercial property market for the past 15 years, working with a variety of public and private sector occupiers, landlords and investors across the region.
