Thought leadership piece written by Phil Harrison, Managing Director at Wates Construction on behalf of the Built Environment Hub.
2015 kicked off with an announcement that Birmingham has topped the bill as the UK’s most investible city, also ranking sixth best in Europe in a report into real estate trends commissioned by Urban Land Institute (ULI) and PwC. The city has had a steady stream of positive press for its investment potential, backed up by figures that put weight to this argument. In 2014 alone, 18,337 new businesses registered in Birmingham according to UK Trade and we’re seeing some real signs that the opportunity for commercial property development in Birmingham has reached a new peak.
The city has undergone a huge transformation over the past decade and there’s little sign of it slowing. In the past five years there has been £2.1bn* of commercial and retail investment in Birmingham and there’s a wealth of flagship schemes in the pipeline, including the £550m Gateway Plus Birmingham New Street redevelopment, the new speculative office at One Arena Central, HS2’s Snow Hill HQ and of course the HS2 terminal at Curzon Street, which will no doubt bring further regeneration to the east of the city.
In terms of commercial development, demand for Grade A office space is continuing to grow, especially for domestic and global businesses seeking a base outside of the London bubble. Take Snow Hill for example and Bruntwood’s recent application for a £14m speculative development at Two Cornwall Street, both of which more than show the increase in office take-up rates in Birmingham and we can but hope that inward investment will continue to follow.
The real opportunity for Birmingham though is not its place as a stand-alone property investment dynamo. Yes the city is thriving, and with foreign investment currently representing 30% ownership of Birmingham’s property market, international funding will keep coming our way. But with huge schemes such as the Manufacturing Technology Centre’s Research and Development campus at Ansty Park in Coventry, the buzz is not just coming from Birmingham. Concentrating solely on the confines of the city limits would be somewhat shortsighted and would restrict the opportunities that the West Midlands represents as a whole. The property and construction industry must therefore look to the abundance of opportunity and investment potential of ‘Greater Birmingham’.
If we take for example the Black Country Enterprise Zone, just one item on the Greater Birmingham agenda at MIPIM, we can see that it’s not just office space that’s on the up. With investments at the newly announced Black Country Enterprise Zone totalling £1.5bn, coming from the likes of Jaguar Land Rover, evidence suggests that manufacturing and engineering are also keeping the West Midlands and Greater Birmingham at centre stage. The difference that could be made by Sir Albert Bore’s combined authority agenda is a hotly debated topic but many would argue that this is the real key to unlocking the West Midlands’ investment potential.
We also obviously can’t ignore the impact that the West Midlands’ connectivity will have on the region’s development markets. There have been some huge leaps forward in infrastructure, an agenda being heavily pushed by Midlands Connect. The forthcoming £50bn HS2 and last year’s runway extension at Birmingham Airport, to name just two, will serve to bring long-term benefit to the region’s economy and crucially, boost employment.
The picture for Birmingham is certainly a positive one and the collaborative action between the public and private sectors is now elevating this to a higher regional level – driving forward an investment agenda for the West Midlands region as a whole and this is the exact direction that we should be taking. As the Built Environment Hub advocates and as is the vision for the Construction 2025 Strategy, the public and private sector must keep working together to fulfil the West Midlands vision being pioneered by so many.