Take-up in the Birmingham office market experienced marginal growth in 2023, with total take-up reaching 703,000 sq ft, surpassing 2022 volumes and exceeding 700,000 sq ft for the first time since 2019. The fourth quarter saw a substantial uptick, with 240,000 sq ft, marking a 14% rise compared to Q4 2022.
The Q4 5-year average witnessed an impressive surge of 54%, highlighting sustained momentum in the market. Furthermore, Q4 outperformed Q3 2023 by 83%, with a take-up of 132,000 sq ft in Q3 and 240,000 square feet in Q4.
Notable deals during Q4 included housing association Green Square Accord at 10 Brindleyplace for CBRE Investors and business process management from First Source Solutions at Tricorn House for CEG. Both deals took approximately 15,000 square feet representing a resurgence in demand for well specified office space in the west side of the city – attributable in part to the newly extended Midland Metro line.
Public services, education, and the health sector acquired the most space in 2023, constituting 30% of the total take-up at 211,000 sq ft. Professional services followed at 18%, and insurance and financial services accounted for 17%. Notably, 64% of the full-year take-up for professional services occurred in Q4, highlighting increased confidence in the market and growing clarity of occupier requirements in the modern hybrid post pandemic working environment.
The education sector has become a significant part of the office market, driven largely by demand from the city’s universities. This not only ensures an influx of new talent into the economy, reflected in consistently rising graduate retention levels, but also provides landlords with an additional avenue of prospective occupier demand, given educational tenants typically seek office spaces which are well connected, high quality and priced at competitive rental levels.
Rental growth remained steady with headlines at £42 and an expectation of this rising to at least £43 by the end of 2024. Looking ahead, forecasts indicate prime rents consistently reaching £48 per square foot by 2027. Over the past decade, Birmingham has maintained an average annual growth rate of 4%, further reflecting the city’s resilience.
Ben Thacker, Director in Savills Birmingham Office Agency team, states: “Birmingham’s office market showcased resilience in 2023 despite economic headwinds, with a 1% YoY increase and a strong full-year take-up of 702,000 sq ft. We are seeing numerous examples of consolidation taking place, manifesting as inward investment for the city. The projected future rental growth and a consistent 4% annual growth rate over the past decade affirm Birmingham as a dynamic and steadfast hub for businesses and investors of all types, attracted by the city’s diverse demographic profile, outstanding transport infrastructure and range of office stock on offer.”
Mark Walsh, EMEA Head of Corporate Account Management, Global Occupier Services at Savills, adds: “We’re seeing many occupiers having a clearer understanding of their real estate requirements post-Covid. Businesses continue to focus their leasing requirements on Grade A offices which have excellent ESG credentials. This has been driven by the desire to satisfy employee needs and ensure staff return to the office, in addition to supporting wider corporate sustainability ambitions.”