WeWork's Retreat And Lockdown Push The Birmingham Office Market Off A Cliff
Anyone in the Birmingham office market who wondered what falling off a cliff felt like now has the answer.
The latest data on office take-up from the Birmingham Office Market Forum showed just 61.5K SF was let in the second quarter of 2020. Of the five deals, just one really mattered: The 48.8K SF let by Apsley/Galliard to the government.
When added to the 16 deals totalling 339K SF recorded in Q1, the 2020 half year to date totals 401K SF in 21 deals. At this point last year the H1 total was 515K SF, which suggests the market is down but not yet out.
However, those cheery totals may not tell the whole story. The figures suggest that in a crisis, Birmingham’s office market has reverted to the historic norm of reliance on a handful of large lettings.
The 2019 H1 data showed 54% of take-up came from deals over 40K SF, during a period that included some unusually large transactions almost entirely driven by WeWork. During H1 2020 the proportion devoted to deals over 40K SF soared to 82%.
Another way to slice the H1 2020 figures shows what happens when WeWork pulls out of the lettings market. It contributed 238K SF to the H1 2019 figures, a surge that now seems to have come to a juddering halt.
“The entire office market was effectively stopped by the pandemic lockdown throughout the quarter, with offices closed, viewings prevented and transactions impossible to progress,” the Birmingham Office Market Forum’s Jonathan Carmalt said.
“Most of the active requirements that existed coming into the quarter went on hold, albeit with many of the occupiers stating their intentions to still proceed in some form after the return to a more normal environment. The early signs post the easing of lockdown are positive inasmuch that such occupiers are now largely actively reconsidering their requirements, with a view to resuming acquisitions as the year progresses.”