The number of office deals in Birmingham city centre is set to spike in the next two years, despite projections that 2018 will fall short of both the average annual number of transactions and take-up of office space, according to Birmingham-based independent commercial property agency KWB.
“Lack of availability of office space, Brexit and the impact of serviced office operators are all having a quietening effect on the Birmingham office market figures this year, but we predict that a large number of lease events, new office space becoming available and a Brexit resolution will all have a positive impact on the office market in 2019 and 2020,” says Malcolm Jones, KWB’s Head of Office Agency, writing in KWB’s Q3 2018 Birmingham Office Market Report.
The third quarter of 2018 (July to September) saw another steady performance in Birmingham’s office market, with a take-up of 158,935 sq ft over 28 transactions, putting it on a par with Q1 (148,483 sq ft over 22 deals) and Q2 (169,929 sq ft over 31 deals). However, projecting these figures to the end of the year, without a Q4 landmark deal, would result in a total take-up some 110,000 sq ft and 26 transactions less than the three year average.
“This is nothing to worry about,” continues Mr Jones. “In 2014, 148 deals were completed, so we anticipate that 2019/2020 will see a spike in the volume of lettings as occupiers which took five year leases in 2014 look to relocate. There are also a number of existing larger requirements for office space in Birmingham city centre which are expected to come to fruition in 2019.
“Although a proportion has already been taken in pre-lets, some 1.8m sq ft of new office space is due to completed in Birmingham city centre in the next two years. This will provide more choice for larger occupiers, particularly those looking to move into the city, and, once the Brexit position finally becomes clear, for more private sector occupiers who have been waiting for some certainty.
“It’s notable that the largest three transactions in Q3 2018 were to public service organisations in the shape of the Government, General Dental Council and Network Rail, taking some 73,000 sq ft between them.
“We don’t know the number of occupiers taking serviced space, only that serviced office operators continue to take space in the city centre, but it is clear from the Q3 figures that smaller office suites of under 3,500 sq ft are still sought after, as they accounted for 15 of the 28 transactions. Small businesses remain highly active in the city and remain keen to sign traditional leases.”