David Tonks, Head of Cushman & Wakefield’s Birmingham office, looks ahead to what is in store for the city’s property market in 2018.
Reflecting on 2017 it is fair to surmise that the Central Birmingham office market enjoyed a strong 12 months that witnessed record take-up and satisfied demand from a broad range of occupational sectors.
The underlying strength of the market bodes well for the next 12 months and once again demonstrates the resilience of Birmingham in the face of wider economic challenges and political uncertainty.
Generally it is fair to assume that the challenges we face in 2018 will be an amplification of those witnessed in 2017 as good quality supply continues to be eroded and occupiers operate with a cautious yet optimistic view of the medium term.
During the course of 2018 we can expect the drivers of demand to be both analytical and instinctive as the role that the office is expected to play continues to widen.
The city centre office is expected to act as a coffee shop/restaurant, a space for collaboration, a resource centre and an up-to-date statement of the occupier’s corporate identity that will assist in both attracting and retaining clients and colleagues.
It does seem that the city is well placed to accommodate the various sectors of demand as the central business district continues to expand and distinctive districts emerge as the effects of both HS2 and Smithfield become more obvious.
Over the next 12 months we can expect to see an increase in the proportion of the market seeking flexible space.
This trend will be most evident in occupier groups seeking to accommodate up to 50 people and contract linked requirements.
This shift in occupational demand will continue to drive demand from serviced office providers and there is little doubt that many of the larger international brands enjoying letting success in London will seek to enter the Birmingham market.
At the other end of the scale there continues to be signs that larger occupiers are keen to consolidate their regional occupation and the number of inward investors actively considering the cost benefits of a regional capital shows no sign of slowing.
Birmingham is certainly well placed to capitalise upon these trends and has proved it is more than capable of offering space that competes on both the national and European stage.
As mentioned at the start of this piece it is likely that the challenges faced in 2018 will be similar to those in 2017 but the shortage of supply will drive an increased focus upon pre-let activity at a time when Birmingham is delivering some of the best quality new space available anywhere in the UK regions.
2018 will see an increased focus upon the suitability and quality of the product at a point in the market when occupiers from all sectors have demonstrated that cost is not the only consideration.