A commercial property expert is predicting a continued upward surge in the office market in Birmingham for the rest of the year due to the recent election and the fall in interest rates.
Office take-up in Q2 in 2024 in the central Birmingham office market totalled 168,512 sq ft in 29 deals.
The quarter saw particularly strong take-up from the public sector with the stand-out letting at Three Snowhill representing 58,697 sq ft.
This follows on from 19 deals totalling 200,282 sq ft being recorded in Q1 to take the half-year to date totalling 368,794 sq ft across 48 deals.
Charles Warrack, Partner at leading property consultancy Fisher German based in Colmore Row, Birmingham, is predicting this upward trajectory to be maintained as the city centre remains an attractive location for a mix of sectors.
He said: “There has been a relatively strong first half of the year and we are taking encouragement from exceeding the 2023 office take-up over the same period. That ultimately ended up being the highest full-year total to date in the post-pandemic period.
“We are seeing big lettings and significant deals happening in the marketplace. Even though we are now four years past the height of the pandemic, the effect on the market along with home working and flexible working means it is good to see that the figures that are being recorded are nearly at the level we were experiencing before the pandemic.
“Interest rates have come down this month which indicates that everything is pointing in the right direction to enable office demand to increase.
“The general consensus across the country now is that we have more stability after Labour won the General Election in such convincing fashion.
“This gives confidence to businesses of all sizes and in all sectors looking to invest or rent which we expect to manifest in leading to more office deals in the commercial market 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 very busy when you walk around and attend networking events, the sentiment is very encouraging.”
Charles believes the demands of employees for high-quality office surroundings and facilities shows no signs of abating as employers maintain a hybrid-working model.
He added: “We are certainly seeing a two-tier market where there’s ‘flight to quality’. Occupiers are wanting better space and that’s because they need the ability to tempt staff back from working from home full-time.
“There’s no doubt employers are going down the route of sourcing better accommodation and that’s 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.
“I think 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.”
