Birmingham has no shortage of office sapce ripe for residential conversion. But doubts remain over the suitability of much of the stock. Graham Norwood reports
Few doubt that Birmingham has potential for converting redundant or outmoded office space into residential units, but there are question marks over whether it can deliver the right units in the right place at the right time.
The pro-conversion lobby has the wind in its sails with more than 30 “live” conversion schemes lodged with Birmingham council and a blaze of publicity surrounding Seven Capital’s acquisition of , a 1970s office block set to become 271 homes.
These conversion enthusiasts say two factors are in their favour. The first is the relaxation of permitted development rights, operating until May 2016, allowing some conversions without consent.
“Investors and developers don’t need to make financial contributions to s106 or wider infrastructure agreements,” says Birmingham council’s planning and regeneration director Waheed Nazir.
The second is that the city is crying out for new homes. Knight Frank’s regional new homes head Mark Evans says: “Between 2011 and 2031 the council estimates a shortfall of 32,900 homes. Barton Willmore’s projections show the shortfall could reach 101,900. Either way, not enough are being delivered.”
But there are obstacles making some analysts believe this trend may be a false dawn. Savills’ Birmingham planning director Michael Davies says: “Office stock is around Snow Hill, with grade-A around Colmore Row and Brindley Place. Tertiary is at Hagley Road and the fringe. These are arterial roads – good for commerce, less good for living.”
Davies also believes the timing is wrong. “Primary and secondary locations are now seeing office demand, so don’t feel pressure to convert, and tertiary areas won’t see the demand for residential stock,” he says.
Meanwhile, GVA land director Mark Birks says plans lodged with the council for “prior approval” under the relaxed permitted development rules may not be what they seem. “In some instances the obtaining of prior approval notices is achieved by owners to protect future options and to improve negotiations with tenants,” he says.
Then there is the issue of cost and feasibility. Block conversion costs in Birmingham are calculated by Savills at £50 per sq ft, and even more for offices with difficult floorplates. This could undermine the business case for conversions in secondary locations.
Challenges for would-be converters include offices from the 1960s and 1970s that often have ceilings considered too low for modern residential design and, perversely, 1980s and 1990s offices that often have ceilings that are too high and conceal ugly air-conditioning systems.
Property management firm FleetMilne accepts that conversions would not solve the city’s fundamental lack of homes, but says the Jewellery Quarter alone offers 60,000 sq ft of unoccupied office space, some of which is ripe for conversion.
Commercial director Nicola Fleet-Milne says: “Office conversions can provide good PRS space. The units tend to have a larger area and floor-to-ceiling height. Buildings in and around Colmore Row would be perfect for targeting the PRS due to their space and multiple storeys.”
A report from Knight Frank says “the taps have been turned back on” for demand for homes, suggesting units provided by conversions would be taken up by investors in particular.
After a 70%-plus drop in demand for homes in Birmingham in 2007/08 and a 74% collapse in new-build completions between 2005 and 2012 (far greater than the typical falls elsewhere) there is now a shortage of quality stock.
A £200m extension to Birmingham airport runway, a 20-year plan to regenerate the city centre and a drive to attract new digital start-ups – not to mention the long-term arrival of HS2 – all add to the attractiveness of the city to investors, Knight Frank insists.
Whether office-to-resi will give those investors what they want and when they want it, however, is a moot point. But be in no doubt: after years in the doldrums, the time looks right for Birmingham’s residential resurgence: it just might not be in the shape of an old office.
