LOOKING BACK TO MOVE FORWARD

With the British Council for Offices (BCO) annual conference, hosted in Birmingham for the first time in 10 years, now a distant memory, I’ve been left to reflect on the key takeaways from the conference and actions needed to facilitate our region’s growth aspirations whilst still transitioning our commercial real estate to a more sustainable future.?

Birmingham, over those 10 years since the last BCO conference, has certainly lived up to its motto and moved ‘forward’. ?No longer throttled by the by the ‘concrete collar’ of old, several key developments have played an integral part in moving the city forward. It was higher education that gave a much needed ‘pull’ to the forgotten Eastside of the city centre and its challenging natural bottle neck imposed by the historic road / rail network clash at Lawley Middleway with the Curzon Building and Birmingham City University development of their campus and city parkland adjoining.

Moving west, to the civic heart of the city and the imposing Paradise Birmingham development, which provided a much needed reimagining of the public realm, access to Broad Street and the west of the city centre that the man-made ‘Manzoni’ blockade of the old Chamberlain Square & the Birmingham Central Library development created.

Recognising the past 10 years and jumping ‘forward’ 10 more with HS2 expected by 2033/34, the distant future does looks bright!

However ………… what about the 10 years in between?

Our immediate challenge

One key takeaway from the BCO Conference related to the commercial sector that really made me curious was the consensus that within the Midlands office stock available there is already a shortage of Grade A commercial space, and that gap between supply and demand is only going grow over the next 4-6 years.

This trend is highlighted in the 第一太平戴维斯 "Birmingham Office Market Q4 Roundup" report, which indicated a 14% increase in Q4 2023 take-up compared to Q4 2022.

Furthermore, 74% of the Q4 2023 total take-up was Grade A space, which is 68% higher than the Grade A take-up in Q4 2022. This underscores a shift towards a desire for higher-quality spaces among tenants where it may not be readily available.

Charles Toogood of Avison Young discussed in the 'Birmingham Office Market' seminar at the conference that “with no obvious new build developments pipelined to come to market during that period” there is a pinch point coming.

This thought was echoed by key figures from 世邦魏理仕 , MEPC Limited , Kier Group and 戴德梁行 all in attendance which paints a stark picture for our clients seeking Grade A space in the next few years.? The fringe chatter at the conference was of the viability pressures creating a less enticing backdrop for developers bringing ‘forward’ new stock to market.

With suggestions that the rental rates for Grade A office space within region are likely to reach ￡45sqft, there is a much needed spike for developers to keep pace with the rising cost of construction.

However,? these are impacts on the mid-term pipeline and of course, for developers, investors and occupiers, it means an alternative approach may be needed to provide the sought after space required in the interim.

Forward – ?to where next?

With a likely gap in new build developments on the horizon, can Retrofitting & Repurposing existing property stock within the region provide sufficient volume of high quality office space?? Considering the pressures of viability, sustainability targets and end user requirements I have high hopes that our regional commercial sector can rise to the challenge of this circular economy.? By doing so Birmingham will continue to move forward and by embracing this circularity then our commercial sector may really be able to gather momentum.?