Is There Any End In Sight To Birmingham's Flexible Workspace Boom?

Flexible workspace is now dominating Birmingham's office market, as takeup accelerates away beyond the recent trend.

Data from Cushman & Wakefield shows that in Birmingham, the first six months of 2019 saw 229K SF transacted in the coworking sector across three deals, representing 44% of total takeup around 514K SF.

All three of these deals were to WeWork which has taken 97K SF at Six Brindleyplace, 81K SF at Louisa Ryland House and 55K SF at 55 Colmore Row.

This compares with a 2017-18 trend of 17% takeup accounted for by the flexible workspace sector.

The recent trend shows that Birmingham's flexible workspace takeup, as a proportion of the total, exceeds that in other UK regional cities.

The analysis comes as WeWork suffers further scrutiny in anticipation of its initial public offering.

Adam Neumann has resigned as chief executive of the company he co-founded in 2010 and built into a global force. Neumann agreed to step down from his position and become nonexecutive chairman during The We Company's board meeting on Tuesday, The Wall Street Journal and The New York Times reported. It is unclear what that means for his controlling shares in the company.

The Cushman & Wakefield report, Coworking 2019: The UK Flexible Evolution Continues, assessed the potential for further flexible workspace in major world markets.

“There are some 4.4 million solo self-employed workers in the UK — 14% of the workforce — a number that has increased by 35% in the decade from 2008," Cushman & Wakefield Director Andrew Berry said.

"While self-employment increases during a recession, often through necessity, the growth has continued since the end of the global financial crisis as improving technology and changing attitudes have made it an increasingly valid and popular choice."

At the same time, the accommodation available to the office-based self-employed has increased considerably in quantity and variety, from the individual serviced office to the more collegiate coworking space, with a corresponding range of additional services. 

In 2018, takeup by flexible workspace operators in Birmingham reached 101K SF, bringing the five-year total to nearly 316K SF.

Looking ahead, Birmingham, along with Manchester, are likely to continue to cement themselves as the regional flexible workspace hot spots, whilst flexible providers continue to seek new opportunities in potential growth cities across the UK, Cushman said.

The development pipeline of speculative office space in Central London and the majority of the UK’s cities remains particularly thin and could prove to be a barrier to growth at the rate seen in recent years.

“Acquiring suitable stock will be a challenge for flexible workspace operators, particularly at a time when off-plan pre-lets are removing space from future supply at a growing pace," Cushman & Wakefield researcher Christopher Dunn said.

"In those markets where large, quality buildings can be brought to market, the flexible offering is likely to flourish. In markets with very limited space in the pipeline, there are opportunities for commercial developers to lead the market.”