The Commonwealth Games opportunity and its impact on Birmingham’s office market

COMMENT After a difficult couple of years following the onset of the pandemic, we are now at the stage where we can begin to look ahead to the promises of the future, and nowhere is this more apparent than Birmingham, which is set to enjoy one of its most prosperous and exciting years for some time.  The Commonwealth Games, which take place in the city this summer, will be the largest multi-sport event held in the UK for eight years. The Games represent a fantastic opportunity to unite the people of the West Midlands and to showcase the city to a global audience, so it’s crucial that we capitalise on this as a region.  Perceptions of Birmingham are often outdated, but anyone who has visited the city centre in the past five years will appreciate just how much change has taken place with its fantastic transformation into a modern, vibrant and diverse place to work and live. Couple this with the major changes to regional infrastructure, including the extension of the cross-city Metro network and, of course, most significantly, the arrival of HS2, and it is clear to see the city is headed in the right direction.  So how do these macroeconomic factors translate into the performance of the region’s commercial property market?  Like all cities, Birmingham inevitably stalled during the pandemic. However, recovery is growing at pace and the city is buzzing once again with the opening of new restaurants and leisure venues as office workers return. The first quarter of this year has seen a seen a significant rise in office demand with transaction levels ahead of historic averages. What’s more, this trend looks set to continue as the future purpose of the office takes shape, with pent-up demand pulling through from both domestic occupiers and inward investors.  Capitalising on the digital economy Unsurprisingly, occupiers are seeking the highest-quality, best-connected working environments for their people. As a result we have seen strong activity in some of the city’s leading developments such as Three Snowhill and Brindleyplace, as well as in emerging locations such as Enterprise Wharf, situated in the Knowledge Quarter which is positioned to capitalise on the region’s growing digital economy.  The pandemic has brought the global environmental crisis to the fore. This has become increasingly evident in real estate decision-making by developers, landlords and occupiers. As new resources come under increasing pressure, there will need to be greater focus on the future reuse of existing buildings, which we are already witnessing at the likes of 5 St Philips in the heart of the CBD. This scheme will not only be focusing on the reuse of building fabric where viable, but also on reaching energy consumption targets while providing the highest-quality workspace.  Birmingham has long had an outstanding track record of attracting inward investment and we have recently seen commitment from high-profile names such as HSBC, Deutsche Bank and BT, which took 283,000 sq ft at Three Snowhill in 2020 in the city’s largest single building office letting.  Leading with life sciences Demand is continuing to build across all sectors, with notable activity coming through from central government, Goldman Sachs’ continued expansion and the BBC, which is seeking a new production facility focused around Digbeth, further bolstering the city’s media and creative industries.    However, the greatest excitement is perhaps the opportunity Birmingham has to accommodate the growing life sciences sector. Bruntwood SciTech’s delivery of a new state of the art health science campus at Selly Oak holds global significance, and will be the first speculatively delivered, purpose-built laboratory space to be delivered in the region, providing unrivalled access to resources including University Hospital and the Institute of Translational Medicine. Birmingham may once have been considered the industrialised, grey heart of the Midlands but it is truly now a vibrant, dynamic city with one of the youngest populations in Europe. Quality lifestyle factors, affordable cost of living, and a diverse, skilled demographic lie at the heart of the offer in what is one of the most connected regions in the UK. The city needs to shout with a louder voice about what it has to offer and what it is capable of offering businesses and, perhaps more importantly, their people. And what better place to do it than centre stage at the 2022 Commonwealth Games.   Ben Thacker is a director in the office agency team in Savills Birmingham