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All Change: Birmingham's Office Market On The Cusp

The spring sun has been shining on Brindleyplace, and Birmingham is looking good. Or it will look good, once the street-level chaos of installing a new Metro tramline is completed. Meanwhile, the mighty Snowhill and Paradise Circus office schemes are on their way to completion, and with completion another series of major construction sites will be cleared.

But do not be deceived. The period of change is not over. In fact, it is only just beginning.

That is the message from The Office Group Chief Executive Charlie Green and Hines Asset Management Managing Director Raj Rajput, ahead of their appearance at Bisnow Birmingham's State of the Market event on 1 May.

Birmingham, prepare to be shaken-up. Residential development, new infrastructure, new technology, new ways of working, and above all newly empowered occupiers are going to rock your world.

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Central Square, Brindleyplace, Birmingham

Raj Rajput is preparing for big changes at Brindleyplace, the 550K SF estate of five city centre office buildings over which Hines presides. Some of those changes are his choice, and some are not, and in the second category falls around 140K SF of lease events due in the next 36 months.

With around a quarter of the floorspace facing a market test, Rajput is preparing to ensure that the 20-year-old office campus is fit to compete with new developments like Snowhill and Paradise Circus. His dilemmas and challenges will be matched by those of other landlords around Birmingham.

Rajput said Hines plans to soften the corporate image of Brindleyplace, a move wider developments help make easier.

"We're seeing a lot of change, particularly we're seeing more residential development come through which can only be good because it provides an all-round appeal for office locations," he said. "There is still good demand in the mid-range residential sector which will help all locations. As will infrastructure development. Yes, today the city centre looks like a bomb site but when the tram extension is complete it will improve connectivity."

"It has taken a while for Birmingham's inward investment effort to get its act together in the way that Manchester did long ago, but it is starting to do more now, and there are grounds for optimism. Though sometimes the city does itself a disservice, like in the Channel 4 relocation bid. Birmingham looked like the front runner, but it went to Leeds. That was a big disappointment and we could have done better."

Occupiers Are Restless

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Chamberlain Square, Birmingham, part of the Paradise redevelopment

Repositioning the scheme will involve refurbishment, rethinking, new amenities and investment. Something quirky is promised. And all this because occupiers are restless.

"There is still a lot of indigenous demand for office space looking to trade up in the city into better floorspace, and they are acutely aware that they need to keep their staff happy," Rajput said.

With a following wind, Hines hopes that rethinking Brindleyplace floorspace can keep its rents at around a 10% discount to prime new-build offices like Snowhill and Paradise Circus.

Many of the changes about to upset the Birmingham office market are summed up in the new and fast-growing flexible office space scene. The Office Group Chief Executive Charlie Green says the city must learn to embrace it.

"The flexible office market in Birmingham is just waiting for a critical mass of good-quality operators to open it up," Green said. "They are coming, and hopefully we will have a presence in Birmingham shortly, and so will others, and once you've a range of quality operations the market will grow.

Everyone Loves Flex

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Flexible (deck chair) offices at The Office Group's White Collar Factory base

"We need quality operators because occupier expectations in Birmingham are higher than ever on all the amenity issues, whether that is first class coffee, or gyms, or generous breakout spaces, basically all the things that were never properly provided by serviced offices or traditional leased floorspace."

To make the amenity-rich formula work, Green said flexible operators need relatively large hubs of between 30K SF and 100K SF, with a sweet spot between 50K and 70K SF.

"I think the momentum is shifting in Birmingham," he said. "The city has a large concentration of the bigger businesses who are always the first to embrace new ways of working. Those businesses are being driven by new technologies, by new ways of working, the speed of working that is now possible, a range of other tech issues, all of which mean operators like us do not have to create demand for our product in Birmingham because it is already there. Birmingham will quickly catch up with London and Manchester in the scale and breadth of its serviced office sector."

To join the conversation at the Bisnow Birmingham State of the Market event register here.