Birmingham office market H1 roundup
Take-up
H1 2023 take-up totalled 331,000 sq ft in Birmingham city centre. This represented a 13% increase on the H1 2022 total and was just 9% below the ten-year H1 average for the market. There were 54 completed transactions which was 13% above the ten-year H1 average for completed deals.
Prime take-up of 42,000 sq ft accounted for 13% of the H1 take-up, with standard Grade A accounting for 63% of the total, clearly demonstrating the continued preference for the better quality product in the market.
Supply
Total supply stood at 1.9m sq ft at the end of H1 2023. This represented a 12% increase on the Q4 2022 total. Based on this increase, this means at the half year point, the vacancy rate for the market stood at 10.2%.
With recent completions of 120,000 sq ft at Enterprise Wharf and 210,000 sq ft at 10 Brindleyplace prime availability stood at 550,000 sq ft at the end of Q2. Savills still considers the prime market in Birmingham to be undersupplied, with just 1.1 years of availability based on average Grade A take-up.
Take-up by business sector
‘Public Services, Education & Health’ was the most active in H1 2023, accounting for 39% of total take-up. This was driven by demand from training and higher education institutions as QA IQ recorded the largest deal in the market in the first half of 2023 with its 45,000 sq ft acquisition at Louisa Ryland House.
Elsewhere, ‘Serviced Offices’ was the second most active sector, accounting for 15% of H1 take-up. This came off the back of a particularly strong Q2 with operators, Re-Defined and Cubo committing to a combined 48,000 sq ft of space in Louisa Ryland House and 2 Chamberlain Square, respectively.
Rents
There was no increase in the prime rental tone in H1 2023, which currently stands at £41 per sq ft. Birmingham has experienced 19% prime rental growth since the end of 2019. Savills expects further growth in the second half of 2023, with latest forecasts expecting rents to increase to £42 per sq ft by the end of the year. Looking further forward, against a backdrop of restricted prime supply and an extremely thin development pipeline, the prime rent is projected to grow by a further 12% to approximately £47 per sq ft by the end of 2027.
Interested in other areas of the UK?
View all of our latest H1 2023 Occupational Office Data research here.