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Workplace Revolution Rolls Into Temple Street, Could WeWork Be Next?

Somerset House, Temple Street

OK, so the "office" is dead in Birmingham (according to PwC) but the workplace is still very much alive.

With coworking giant WeWork sizing up the opportunities in the city, how much more growing can the serviced office and coworking sector do?

BE Offices has signed up for 36K SF at Somerset House, Temple Street,  as landlord Circle Property square Birmingham's latest workspace revolution deal.  Headspace, the boutique workspace business owned by BE, will occupy 12K SF. It will be their fourth outlet, after two in London and one in Manchester.

The announcement means that, together with 11K SF ground floor lettings to Latin American restaurant chain Las Iguanus and Camerons Brewery's 'The Head of Steam' pub, the total rent roll at Somerset House is now £1.23M. Circle acquired the block in 2016 paying £7.75M.

The latest deal comes as the pace of new arrivals in the coworking and flexible workspace sectors grows.

Coworking sector market giant WeWork has yet to make its Birmingham debut. However, speaking to Bisnow, WeWork European Transactions Director Mary Finnigan hinted that deals could be expected.

“We’re super open to all the major cities,” Finnigan said.

WeWork Old Street Commons London

Interest from the coworking and serviced sector is unlikely to abate, Knight Frank U.K. Head of Commercial Research Lee Elliott said.

“We believe 2018 will be the year in which the coworking revolution hits the U.K. regions," he said. “Businesses, under huge pressure from digital disruption, brought change to business models which fuelled market demand. Furthermore, the economic backdrop forced many to actively consider and commit to locations that presented a property and operational cost advantage or a cost profile more appropriate to the type of business function being fulfilled.

“In our view, there will be four key characteristics of occupier demand in the regional markets during 2018," he added. "Increased occupier mobility, cost sensitivity — but not at the expense of workplace quality — further disruption fuelling demand, and an increased demand for service."

Birmingham is already seeing a rash of coworking and serviced developments. Last month Orega announced it was nearly doubling its platform at Ashby Capital's Colmore Building, to create a total presence of 28K SF.

Data from KWB showed Birmingham's serviced office sector has grown from 2% of the market in 2016 to 20%.

“Birmingham was one of the earliest regional cities to recognise the need for coworking premises, where budding entrepreneurs and creative businesses can take advantage of modern mobile technology and share working and social facilities," Knight Frank’s Head Of Office Agency in Birmingham Jamie Phillips said.

“Last year serviced office provider Regus committed to almost 100K SF of space in the city and we believe the Birmingham coworking trend will continue through 2018, and beyond.”