Take-up amounted to just 49,837 sq ft in the city centre and 20,326 sq ft out-of-town, 73% below the ten-year average.
The largest city centre deal was 16,499 sq ft to the Department for Work and Pensions (DWP) at B1 Summerhill Road, building on an initial 49,000 sq ft deal in 2020 and seeing the space fully let. In-line with growing momentum of Whitehall’s ‘Levelling Up’ agenda, the latest DWP deal reaffirms Birmingham’s competitiveness as a Government base - accounting for a third of the city’s office market activity in the past 12 months.
The out-of-town market was led by recruitment firm Adecco’s 9,114 sq ft letting at T3, Trinity Park, Solihull.
Indicating a focus on smaller, better quality space in a post-pandemic market, 19 of Birmingham’s deals in Q1 were for under 5,000 sq ft of space, including two 4,000 sq ft lettings to law firm Clarke Willmott at 9 Colmore Row and Sandwell College at 13 Bennetts Hill.
Carl Potter, Principal and Managing Director of the Birmingham Office at Avison Young, said:
“As expected and mirrored across many of the UK’s core cities, demand in the office sector has been subdued over the past 12 months, culminating in a slow Q1 for Birmingham.
“We are however seeing a resurgence and improving sentiment easing into Q2, with an uptick in enquiries and knowing that activity will increase as occupiers have greater clarity following the loosening of Covid-19 restrictions.”
Charles Toogood, Principal and Managing Director, National Offices Team at Avison Young, said:
“A combination of lockdown and the traditionally slow start to the year has not surprisingly resulted in well below average take-up activity for the Big Nine office markets during Q1, particularly in Birmingham. However, sentiment is improving noticeably, enquiries are increasing and there is enough recent activity in both the occupier and investment markets for us to be confident that as restrictions ease, activity will increase throughout the year. The recent announcement of Goldman Sach’s new venture into the centre of Birmingham is great recognition of the benefits the City has to offer and will in itself drive forward both confidence and an uptick in the market.
“In both the city and out-of-town markets in Birmingham, the flight to quality over size is a clear and accelerating trend, seen in the volume of smaller deals coming through, with occupiers looking for less but better-quality space. However, there is limited stock and some buyers are understandably cautious about the quality of covenants and length of leases. With this in mind, Birmingham’s strong pipeline will provide much needed quality supply that will be in demand as 2021 and 2022 unfold.”
To read the full research update on Big Nine office markets (Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle), click here.