HS2 contracts & diverse demand drive office take up in Birmingham’s core & fringe – Savills

26 October 2017

Birmingham’s core and fringe office take up looks set to exceed 850,000 sq ft (78,965 sq m) by year end, according to Savills, as sustained requirements from HS2-linked occupiers and the generally diverse nature of demand mean the city remains well shielded from Brexit.  This annual total would be 21% above the five-year average of 703,000 sq ft (65,309 sq m), says the firm.

The serviced office sector acquired 82,000 sq ft (7,618 sq m) in Birmingham in the first three quarters of 2017, greater than any previous annual total. This is due to occupiers increasingly seeing the appeal of flexible lease terms amid new HS2 and other infrastructure related contracts, reports Savills, as well as an emerging tech sector.  Serviced office operator iHub signed for 18,000 sq ft (1,672 sq m) at Colmore Gate while landlord CEG is supporting growing requirements for flexible space from both established businesses and start ups with the creation of co-working serviced office business Alpha Works at its Alpha building.

Additionally, following HSBC and Deutsche Bank’s decision to relocate over 1,000 roles from Central London to Birmingham, Savills says occupational cost pressures in the capital could see more London-based financial and insurance sector companies seek space in the city.  The firm estimates that the average annual saving in staff and property costs per employee when relocating from Central London to Birmingham is circa £20,000. 

Nick Williams, office agency director at Savills Birmingham, comments: “Strong city centre demand from a diverse range of occupiers is expanding the perceived boundaries of the core market and driving much anticipated rental growth in buildings that have benefitted from a comprehensive refurbishment strategy.”

Mike Barnes of the commercial research team at Savills adds: “Robust take up combined with the fact that no new speculative developments are scheduled to complete until Three Snowhill and 1 & 2 Chamberlain Square in 2019 means competition for the best quality space will intensify.  As a result we expect top city centre rents will rise from £33 per sq ft currently to in excess of £34 per sq ft by the end of 2019.”

 
 

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Key Contacts

Nick Williams

Nick Williams

Director
Office Agency

Savills Birmingham

+44 (0) 121 634 8401

 

Ben Thacker

Ben Thacker

Director
Agency (Office)

+44 (0) 121 200 4561