Birmingham has achieved the highest office occupancy rate outside of London and the South East.

Birmingham secured three out of the five largest deals in this period, including leasing 36,000 sq ft at Louisa Ryland House, 22,900 sq ft at Crossway House/156 Great Charles Street, and 21,500 sq ft at 54 Hagley Road.

The city witnessed a 15% increase in office space leased in Q2, totaling 174,907 sq ft. In the first half of the year (H1), Birmingham recorded a 12% growth in office space uptake compared to the same period last year, marking the highest H1 occupancy since 2020.

While 37% of office space occupancy in the UK came from the banking, finance, and business services sector, Birmingham saw a dominant presence of flexible office operators and the education sector. Notable deals included RE-defined securing space at Louisa Ryland House, Arden University leasing space at Crossway House, and Global Banking School and QAHE's substantial leases in previous years.

Despite a substantial 49% year-on-year increase in office space uptake, available stock only increased by one percent, accounting for 14.5% of the available stock, or 2,508,542 sq ft.

Theo Holmes, senior director and head of office agency at CBRE in Birmingham, pointed out that businesses looking for office space have limited options, whether it's prime secondhand or newly developed space. He noted that while new speculative development at 3 Chamberlain Square, Paradise, will add 189,000 sq ft of much-needed office space in Q1 2025, 2024 is expected to be driven by significant redevelopment projects like 19 Cornwall Street and 5 St Philips, totaling approximately 215,000 sq ft. This could result in a supply shortage if office space demand continues to rise.

Several factors hinder speculative development in Birmingham, including high financing and building costs, as well as a shortage of suitable sites. Holmes emphasized that Birmingham needs to expand beyond its traditional core business district, with HS2 likely playing a role in attracting further development.

Prime office rents in Birmingham have now exceeded £41 per sq ft, with a continued upward trend for top-quality spaces. Other UK regions like Manchester, Edinburgh, and Bristol have already surpassed this level, with London's West End commanding the highest rent at £140 per sq ft.