Birmingham’s flexible working growth is set to drive up prime office rents by 10.4% by 2021.
Prime office headline rents are expected to grow from £33.50 per sq ft at the end of Q3 2017 to £37 per sq ft in Q4 2021, according to Knight Frank’s latest Birmingham report.
Flexible working operators took 313,000 sq ft of office space this year, making up 22% of office transactions, up from 4% in 2016. They comprised co-working models, traditional managed centres and full service operators.
Spaces by Regus was the most active new entrant, taking 30,000 sq ft in the Lewis Building and 80,000 sq ft in the Crossway. Instant Offices and MSO also acquired a number of locations.
Grade-A take-up accounted for more than half the activity in central Birmingham in 2018. In Q3 there was 120,000 sq ft of new-build availability, with a maximum of 55,000 sq ft in a single building.
In the past year, there have been 171 new foreign direct investment projects in the West Midlands, a 13% increase on the previous year and the highest of any UK region outside of London.
Ashley Hudson, Birmingham Office head at Knight Frank, said: “While Birmingham’s adoption of flexible and serviced offices may have been sluggish at the outset, it is playing catch up fast. Investors and developers have embraced the sector, by either accepting leases to operators or establishing their own platforms.
“The transformation of retail, leisure and culture amenities in the city centre and the world-class office developments, including 3 Snow Hill, Paradise Circus and 103 Colmore Row, ensure that Birmingham is well positioned to compete for major occupiers on a national scale.”
Knight Frank said as traditional occupiers explore flexible options for expansion, this growth should provide reassurance to landlords and pointed to a structural shift in the market with a focus on scale, but also bespoke highly-serviced offerings.
In October, EG reported that WeWork had instructed JLL to find 60,000 sq ft of offices for its Birmingham debut. The flexible workspace giant is expected to launch in the city next year.
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