Who’s Occupying the Market?

  • Central Birmingham office take-up has been recorded at 61,474 sq ft over 5 deals in Q2 2020, with the most significant transaction occurring at B1 where DWP have taken 48,787 sq ft.
  • The slump in take-up figures following the excellent take-up figure of 338,985 sq ft for Q1 2020 come as a result of COVID-19 and the enforced lockdown the country experienced.

Regional Recovery

Due to the nature of this pandemic and how easily the virus transmits, it is likely that many will not return to the office until at least the end of the year. The problem is not necessary because employees are concerned about working from their office, albeit companies will have to reduce their office occupancy levels due to the social distancing measures that need to be adhered to. Employees are more concerned about having to use congested public transport in order to get to work. With the relatively small number of the workforce that use public transport to get to work in the West Midlands (12%) compared to London (55%), Birmingham and other regional cities are well positioned to lead the nation’s recovery out of this crisis.

Modes of Transport to Work

Source: Department for Transport

Knight Frank recorded 80,000 sq ft of new enquiries in the weeks that followed the relaxation of lockdown restrictions

Alternative Healthy Commutes

Birmingham City Council has announced funding for the development of dedicated cycle route into the city centre and to key employment hubs, widening pavements and park & pedal schemes at train stations across the city. Schemes such as these will put Birmingham on the front foot in a post pandemic world.

Three Snowhill

COVID-19 has had Significant Impact

The impact of COVID-19 has been felt across all of the UK regional cities with many suffering from low take-up figures. Notable transactions include:

  • Leeds: New headline rent of £32 per sq ft was achieved at 34 Boar Lane as the ISIO took 7,000 sq ft at the building.
  • Birmingham and Bristol: Birmingham and Bristol: The DWP is responsible for the two largest transactiosn within these cities as they took significant amounts of space (48,747 sq ft at B1 in Birmingham and 21,500 at 123 Winterstoke Road in Bristol)

UK Regional Cities – Office Take Up Q2 2020

Requirements Start to Build

As a result of many occupiers pausing their requirements in order to take stock of the situation with COVID-19 and further new enquiries, particularly in the weeks that followed the relaxation of the lockdown restrictions, coming forward this has created further pent up demand. This has created further pent up demand and although the supply side crisis has eased due to the practical completion of both Three Snowhill and Two Chamberlain Square, the landscape still remains favourable for landlords in Birmingham city centre with 840,000 sq ft of requirements looking at 480,000 sq ft of available Grade A office accommodation in the city. Therefore Knight Frank forecast that market dynamics will ensure that prime rents will hold firm over the next 18 months.

KF Office Agency Comment

With the an enforced lockdown being imposed on many for the most of this quarter, the take-up figures were always going to be disappointing as occupiers adjusted to working from home.

As we have seen further lockdown restrictions eased with restaurants, pubs and haiurdressers recently opening and further signs of normality returning to our lives, we envisage that many of the occupiers with requirements in the market will look to gain frst mover advantage in order to secure the space that their business will require to attract and retain staff going forward to ensure they have the right people to navigate them through the recovery phase.

Knight Frank are currently tracking over 840,000 sq ft of active office requirements. These include:

GPA 200,000 sq ft

ARUP 60 – 80,000 sq ft

Hiscox 60,000 sq ft

Atkins 60,000 sq ft

Eversheds Sutherland 40 – 60,000 sq ft

Goldman Sachs 60,000 sq ft

AXA 30,000 sq ft

Around 100,000 sq ft is currently under offer in the city centre, of which Mazars are rumoured to be under offer at Two Chamberlain Square.

Grade A office supply has increased to 480,712 sq ft following the practical completion of Three Snowhill and Two Chamberlain Square. The following buildings all have vacancy within them:

Two Chamberlain Square 130,000 sq ft

Two Snowhill 120,000 sq ft

Baskerville House 56,000 sq ft

Oozells Building 36,000 sq ft

1 Newhall Street 35,000 sq ft

The Lewis Building 33,000 sq ft

No 1 Colmore Square 22,000 sq ft

The development pipeline has now reduced in size with the delivery of Two Chamberlain Square and Three Snowhill during this quarter. The next major building to be delivered will be 103 Colmore Row in Q3 2021.

103 Colmore Row Delivering 230,000 sq ft in Q3 2021

10 Brindleyplace Delivering 110,000 sq ft in Q4 2021

One Centenary Way Delivering 280,000 sq ft in Q4 2022

Active Sectors (Q2 2020 vs Q2 2019

Development pipeline / pre-letting activity in schemes that have started on site

Active Requirements (10,000 sq ft+)

Important Notice © Knight Frank LLP 2020 – This report is published for general information only and not to be relied upon in any way. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Knight Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names.