The Coworking office market in Birmingham will continue to boom in the next three years, according to Cushman & Wakefield.
The firm predicts that take-up from Coworking providers in Birmingham will exceed 700,000 sq ft by 2021.
The findings were presented at Cushman & Wakefield’s annual Property Outlook event for the Commercial Property Market for 2019 and beyond at the Everyman Cinema in the Mailbox.
David Tonks, Head of Cushman & Wakefield’s Birmingham said: “The rise of the Coworking sector reflects the changing make-up of demand and the way we are all using space. Take-up by the professions and financial institutions is stable but Serviced Office Providers have become a major source of demand. The sector is benefitting from changes in general working practices such as Agile working and the Gig economy.
“Birmingham is also the youngest city in Europe with over 100,000 Graduates within one hour. This, combined with the scale of the Automotive, Medical and Financial sectors in Birmingham, is driving innovation and sustained demand from the coworking sector in the foreseeable future.”
He continued: “We will also see the average size of Serviced Office space in Birmingham increasing from a little over 20,000 sq ft to nearer 30,000 sq ft in the next three years as more value-added services such as cafés, gym, concierge services are put into each centre.”
Whilst supply levels in the city remain below the UK average, the firm anticipates there is over 100,000 sq ft of coworking demand at present.
Despite wider economic and political pressures facing the region, Mr Tonks identified the advent of 5G, HS2, the 2022 Commonwealth Games and the regeneration of Smithfield Birmingham as key opportunities for the West Midlands.
There were also presentations from Patrick Scanlon, Head of UK Offices Insight at Cushman & Wakefield who discussed ‘Opportunities Amidst Uncertainty’. He highlighted that despite concerns over Brexit and Global trade, UK business has ‘held its nerve’.
Patrick Scanlon said: “The impact of Brexit on UK financial services and real estate has been over-stated with fewer firms relocating staff into EU countries than had been forecast. The threat of trade wars and protectionism is likely to have a far greater impact on the real estate sector, although Brexit may cause short-term disruption.”
He continued: “As Brexit and other sources of uncertainty dominate the headlines, we can get fixated on the ‘here and now’ but real estate is a long-term game.
“Over the coming years, there are many non-cyclical trends that will create opportunities for investors and occupiers who stay ahead of the curve. These trends will be in place regardless of global trade volumes, Brexit or any other external force.”
These opportunities include the next generation of tenants, the rise of Coworking and Alternative real estate, such as healthcare and student living, which accounted for an all-time high of 32% of regional investment volumes in 2018.
Patrick concluded: “Markets that have strong fundamentals will stay popular with core investors. Meanwhile, the more challenged parts of the market will see pricing drift until they look good value for opportunistic investors looking to redevelop and repurpose assets. There is plenty of capital looking for these opportunities.”
Richard Pickering, Cushman & Wakefield’s Head of Futures Strategy concluded by discussing the impact digitisation will have on real estate over a longer horizon. He considered the potential for activities currently carried out using real estate to be substituted by digital alternatives, and posed the question, ‘Could this mean the end of real estate?’
“In short, no,” said Richard “however, we in the industry need to treat this as a wake-up call. The same trends we see today in retail, have the potential to bleed into other sectors. Digital business models tend to have cost and convenience advantages. This sets a challenge for real estate investors to reposition their assets and portfolios to focus on real estate’s inherent strengths, such as end-user engagement and experience. For the best innovations in this space we need to look increasingly outside of our industry and be willing to challenge long held paradigms of the role of real estate.”