Hopes Going Up, Floorspace Going Down: Birmingham’s New Normal Office Market
The deal will see 850 staff relocate to two floors of the 183K SF Paradise Birmingham speculative new build. Atkins, a member of the SNC-Lavalin Group, signed a 15-year lease. It hopes to complete its move to Paradise in autumn this year following the fit-out of its new space.
The deal is good news, and bad news, for the recovering central Birmingham office market.
The good news is that the city’s office market has been gathering speed in Q3, which looks set to see a return to something approaching pre-Covid levels of take-up.
Office take-up in the spring quarter of 2021 totalled 204K SF in 24 deals, the Birmingham Office Market Forum said. This compares with transacted 320K SF in the second quarter of 2019. During Q3 the market has gathered speed, with a series of deals including a 68K SF letting to Arup and a 12K SF signing to wealth manager Tilney Smith & Williamson.
The bad news is that the occupiers of grade-A floorspace are slashing their requirements. In the case of Atkins the cut is appreciably more than 50%, and very much steeper than the cuts in floorspace seen in other recent prime lettings.
The 850 staff expected to operate out of the new Chamberlain Square Akins’ office might once have generated an 85K SF requirement. Atkins is vacating 75K SF office at the Axis building, Holliday Street, where it signed a 10-year lease in 2011.
The Atkins deal follows Arup’s decision to take 68K SF at nearby One Centenary Way, signing up for less floorspace than it enjoyed at its 90K SF Solihull campus.
Both deals show how occupiers are rethinking their needs as hybrid working goes mainstream.
At almost 2M SF, Paradise is delivering up to 10 new flagship buildings, offering offices, shops, bars, cafés, restaurants, a four-star hotel and a 49-storey residential tower across 17 acres in the heart of the city.
The project is the work of Paradise Circus Limited Partnership, a private-public joint venture with Birmingham City Council. The private sector funding is being managed by Federated Hermes, which has partnered with Canada Pension Plan Investment Board on the first phase of the development. MEPC is the development manager.
Outline planning permission has been sought for a redevelopment of the former Atkins site at Axis, Holliday Street, to provide 1M SF of new office floorspace.