As SEGRO’s £2bn strategic partnership with the West Midlands Combined Authority puts the region firmly in the spotlight, West Midlands mayor Andy Street is hoping the deal will set the tone for the area’s growth trajectory over the next decade.
Speaking exclusively with EG at UKREiiF, Street highlighted how the combined authority’s pro-development stance is fostering growth, as well as the opportunities and challenges in realising the region’s growth potential.
Warehousing push
SEGRO is aiming to deliver 13.5m sq ft of net zero, tech-enabled warehousing and purpose-built space for research and development and light manufacturing across the region. The WMCA will assist in site selection, assembly and remediation during the development drive, which is expected to create 14,000 jobs.
The investment includes the development of SEGRO Park Coventry – a 450-acre site with planning permission for 3.7m sq ft of industrial space, which Street called “the brownest of brownfield sites”.
Conversations about a partnership took place when the WMCA took stock of SEGRO’s ESG ambitions, as well as its standing in the logistics sector.
“There was a foundation investment happening anyway, but we looked at the ambition that [SEGRO] was showing in terms of its commitment to local people for training and job opportunities, to brownfield [and] to net zero,” said Street.
“SEGRO Park is best described as a next-gen state farm, and obviously the logistics industry is changing very fast. It is becoming very capital-intensive, becoming a good player. Out of that came the discussion [that] we are going to need more of this.”
Pro-development mindset
The investment underscores the region’s broader progress with regeneration. Street said the WMCA is determined to ensure the area is “pro-development” – an approach that has enabled the region to deliver on its housing targets. Its sites are “overwhelmingly on brownfield land”, he said.
“The figures don’t lie, last year it was a record number of new homes and we are ahead of that target,” he said.
“We are also providing a mix of homes; we are improving our affordable housing provision. It is currently at 29%, which is good, and we never compromise, there is a 20% minimum requirement.”
Beyond residential, the WMCA has honed in on eight areas where it has identified “exceptional” potential for growth in the next few years, which real estate could play a significant role in supporting. Those are: electric vehicle charging networks; battery production; storage; the professional services sector; tech deployment; fintech; medtech and health; and aerospace manufacturing.
In terms of geographies, Street has tipped Birmingham’s Gun Quarter district as the next development hotspot.
Street said: “20 years ago, we were still talking about the Jewellery Quarter in Birmingham as the next space for housing growth, but what has happened [has been] spurred by HS2 and [the Metro Eastside extension] coming soon. Digbeth has become a lot more investable, and there is a lot coming there.
“My bet is, the Gun Quarter is the next quarter where we will see go through massive redevelopment.”
Local plans in “stand-off”
More broadly, Street said WMCA’s growth ambitions risk being stymied by ongoing uncertainty around proposed changes to the National Planning Policy Framework. He added some of its local plans have been affected.
“We do need to see – and I think Michael Gove is absolutely on this – a swift conclusion to the questions [around] NPPF,” said Street. “There is a bit of a pregnant pause. Some of our local plans are in a stand-off position, and that is having a real effect on the ground.”
The burden of the inflationary environment, and its effect on demand, is also weighing heavily on Street’s mind.
“[Cost inflation] has hit all of our schemes really hard,” he said. “The borrowing cost is vast as well. No one can question that the demand level has been impacted by high inflation.”
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