The leading, global real estate services firm Cushman & Wakefield predict that the Birmingham office market is set to boom over the next three years.
Cushman delivered the prediction as part of their Property Outlook event for the commercial property market in 2019.
David Tonks, Head of Cushman & Wakefield’s Birmingham said: “The rise of the Coworking sector reflects the changing make-up of demand and the way we are all using space. Take-up by the professions and financial institutions is stable, but Serviced Office Providers have become a major source of demand. The sector is benefitting from changes in general working practices such as Agile working and the Gig economy.
“Birmingham is also the youngest city in Europe with over 100,000 Graduates within one hour. This, combined with the scale of the Automotive, Medical and Financial sectors in Birmingham, is driving innovation and sustained demand from the coworking sector in the foreseeable future.”
The commercial property consultants estimate that coworking space will surpass 700,000 sq ft by 2021.
David continued: “We will also see the average size of Serviced Office space in Birmingham increasing from a little over 20,000 sq ft to nearer 30,000 sq ft in the next three years as more value-added services such as cafés, gym, concierge services are put into each centre.”
Although statistically, the city is still below the UK average, Cushman & Wakefield believe there is a demand for coworking space of over 100,000 sq ft.
Patrick Scanlon said: “The impact of Brexit on UK financial services and real estate has been over-stated with fewer firms relocating staff into EU countries than had been forecast. The threat of trade wars and protectionism is likely to have a far greater impact on the real estate sector, although Brexit may cause short-term disruption.”
He continued: “As Brexit and other sources of uncertainty dominate the headlines, we can get fixated on the ‘here and now’ but real estate is a long-term game.
“Over the coming years, there are many non-cyclical trends that will create opportunities for investors and occupiers who stay ahead of the curve. These trends will be in place regardless of global trade volumes, Brexit or any other external force.”
The predictions keep in mind the ‘next generation tenants’ alongside the rise of coworking and other sectors such as health care and student lettings which totalled 32% of regional investment volumes in 2018 – this makes it the all-time high for this year.
Patrick concluded: “Markets that have strong fundamentals will stay popular with core investors. Meanwhile, the more challenged parts of the market will see pricing drift until they look good value for opportunistic investors looking to redevelop and repurpose assets. There is plenty of capital looking for these opportunities.”
Richard Pickering, Cushman & Wakefield’s Head of Futures Strategy, said: “Could this mean the end of real estate? In short, no. However, we in the industry need to treat this as a wake-up call. The same trends we see today in retail, have the potential to bleed into other sectors. Digital business models tend to have cost and convenience advantages. This sets a challenge for real estate investors to reposition their assets and portfolios to focus on real estate’s inherent strengths, such as end-user engagement and experience. For the best innovations in this space, we need to look increasingly outside of our industry and be willing to challenge long-held paradigms of the role of real estate.”