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Birmingham’s flexible office boom could be over sooner than expected.
That is the conclusion tentatively reached by KWB in its analysis of the city’s office scene.
Flexible office accommodation accounted for 29% of the total 2018 office take-up.
The total was boosted by Birmingham City University's acquisition of 118K SF at the derelict Belmont Works site in Eastside ahead of its conversion into a £60M STEAMhouse hub for small businesses, the largest deal in the sector. Other new arrivals included Headspace which took 12K SF at Somerset House, Temple Street.
These transactions took the total space acquired for serviced and managed offices in 2018 to 215K SF and followed the 200K SF acquired by serviced and managed office operators in 2017.
"By looking at the average annual take-up of office suites of 5K SF or under over the past five years, we estimate that only 63K SF in the last two years may have been absorbed by serviced offices," KWB Head of Office Agency Malcolm Jones said. "This falls far short of the growth in provision for serviced offices, which may indicate high availability of space in some of these building.
"The average length of contract in serviced offices has fallen to just six months, and the average length of stay is now around 21 months."
Indeed, so many operators have moved into the Birmingham serviced office market in the past two years, it raises the question as to whether they can all succeed, even with the boost some are expected to receive from Commonwealth Games organisations, Jones said.
Although the Commonwealth Games is expected to generate demand for another 80K SF of short-term office space, KWB suggested demand for serviced floorspace may have peaked.
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