PropertyEU has begun a tour of cities catching the eye of investors and occupiers across Europe.
First on the map is Birmingham in the UK, which has the youngest population in the whole region.
With powerful demographics, not only is the Build-to-Rent (BTR) sector attracting multiple developers, funds, investors and operators, but major mixed-use schemes are under way too and have been attracting blue chip tenants.
PropertyEU stopped off at the Paradise project, a £1.2 bn (€1.4 bn) three-phase city centre project boasting 10 new buildings and three public squares with 1.74 mln ft2 of new office space, 120,000 ft2 of retail and leisure, and 370 BTR units. Much of it has been built already, while a hotel and Phase 3 is under construction.
Tenants include PwC, Goldman Sachs, and Arup.
Subscribers can view the feature in the forthcoming March issue.
Today, Savills issues a report suggesting in Q4 2023 Birmingham’s office market witnessed a 14% uplift in take up compared with Q4 2022.
Overall, take up in the Birmingham office market experienced marginal growth in 2023 reaching 703,000 ft2 surpassing 2022 volumes and exceeding 700,000 ft2 for the first time since 2019.
The fourth quarter was the star performer. According to Savills, the Q4 5-year average witnessed a surge of 54%, highlighting sustained momentum in the market. Furthermore, Q4 outperformed Q3 2023 by 83%, with a take-up of 132,000 ft2 in Q3 and 240,000 square feet in Q4.
Notable deals during Q4 included housing association Green Square Accord at 10 Brindleyplace for CBRE Investors and business process management form First Source Solutions at Tricorn House for CEG. Both deals taking approximately 15,000 ft2 each and representing a resurgence in demand for well specified office space in the west side of the city – attributable in part to the newly extended Midland Metro line.
Public services, education, and the health sector acquired the most space in 2023, constituting 30% of the total take-up at 211,000 sft2. Professional services followed at 18%, and insurance and financial services accounted for 17%. Notably, 64% of the full-year take-up for professional services occurred in Q4, highlighting increased confidence in the market and growing clarity of occupier requirements in the modern hybrid post pandemic working environment.y’s universities. This not only ensures an influx of new talent into the economy, reflected with consistently rising graduate retention levels, but also provides landlords with an additional avenue of prospective occupier demand given educational tenants typically seek office spaces which are well connected, high quality and priced at competitive rental levels.
Rental growth remained steady with headlines at £42 and an expectation of this rising to at least £43 by the end of 2024. Looking ahead, indications forecast prime rents consistently reaching £48 per square foot by 2027. Over the past decade, Birmingham has maintained an average annual growth rate of 4%, further reflecting the city’s resilience.
Ben Thacker, director in Savills Birmingham office agency team, said: ‘Birmingham’s office market showcased resilience in 2023 despite economic headwinds, with a 1% YoY increase and a strong full-year take-up of 702,000 ft2.’
‘We are seeing numerous examples of consolidation taking place, manifesting as inward investment for the city. The projected future rental growth and a consistent 4% annual growth rate over the past decade affirm Birmingham as a dynamic and steadfast hub for businesses and investors of all types, attracted by the city’s diverse demographic profile, outstanding transport infrastructure and range of office stock on offer.’
The data comes despite Birmingham City Council’s challenges. Last September it declared itself bankrupt. But John Cotton, leader of the council, has stated: ‘Our council is facing major challenges but record levels of investment continue to flow into the city and I know from conversations with developers and investors they're still backing Birmingham.’
