The latest schemes in progress along Birmingham’s so-called Golden Mile signify the city’s shift away from cheep-and-cheerful entertainment venues towards the development of top‑quality modern accommodation and well-connected office spaces.
At 212-223 Broad Street, construction is set to begin imminently on what will be Birmingham’s tallest residential building. It will see the site of the old Tramps nightclub transformed into a £183m BTR scheme.
Moda Living’s 42-storey build-to-rent scheme, 2One2, will comprise 481 flats, complete with a 200m running track on the roof and a mobile app giving residents control over their thermostats and virtual door buzzers.
Broad Street is trying to shake off a reputation for cheap drinking and low-end nightclubs. Interspersed between the two-for-one cocktail offers are signs for Moda Living and Wates, as city centre resi developments replace the tired bars that no longer attract the same crowds.
“The cheap-and-cheerful pubs and the hen parties have been pushed out by the changes that occur with that development process,” says Phil Carlin, managing director at SevenCapital.
Development has been stimulated by the removal of the A38 ring road, the promise of HS2 and citywide infrastructure improvements. A £149m investment in Midland Metro will see an additional 1.35 miles in the second phase, which was due to start in September, extending west from New Street up to Hagley Road.
“The dots are all being joined together now,” says Carlin. “Historically we had key projects like the Mailbox. That has changed enormously, and there is good management of the public realm and that environment is coming together.”
A new city centre
The arrival of large resi schemes in Broad Street started with SevenCapital’s 1 Hagley Road. The scheme used permitted development rights to transform a 1960s redbrick office into 271 luxury modern apartments in 2016.
However, resi development activity in the city centre is shifting, says Mark Birks, head of regional land and development at GVA. Where post-recession housebuilders focused on high-end, small-scale homes in the northern region of the Jewellery Quarter, this has moved through Broad Street and future opportunities lie largely in the southern region of Digbeth.
“Smithfield is offering this leisure-retail-commercial functionality to try to put it on level-pegging with places like the Jewellery Quarter, which is a safe haven for resi, because they have that critical mass, that amenity and that retail,” says Birks. “Birmingham is now evolving to create a proper cross-section of housing product for all people.”
The £1bn Smithfield Market development, stretching over 34.6 acres, is expected to deliver 2,000 new homes and more than 3m sq ft of commercial, retail and leisure space. Birmingham City Council has been on the hunt for a developer since April 2017 – and the shortlist is down to two, with either Delancey or Lendlease expected to pick up the site before the end of the year. Bouygues and Patrizia’s nearby The Forum will offer 334 PRS homes, and there is a scattering of larger-scale resi developments pending planning approval or awaiting construction, including Galliard and Apsley’s Timber Yard.
A London ‘exodus’
Adjacent to Broad Street, Arena Central is finally springing into life. Miller Developments’ 9.2-acre site includes 670,000 sq ft of office, 530,000 sq ft of residential and a 250-bedroom hotel.
Last month Miller welcomed 2,500 HSBC employees to their new 210,000 sq ft HQ at One Centenary Square, after signing a 250-year lease in 2015. Miller has lined up HMRC and the University of Birmingham to move into neighbouring buildings at the end of 2020, with hopes for more governmental take-up on future buildings.
“HSBC acted as a catalyst and really established the pitch here,” says Andrew Sutherland, joint managing director at Miller Developments.
“We have been talking about an exodus from London for years,” he says. “It has taken a long time.”
Sutherland says connections to Birmingham have made it the obvious choice for companies and people looking outside London. “As a consequence, we have HS2 and all the provisions for that dragging more people in and that will continue to expand as we go on to HS3 and the plethora of consultants that will piggyback on that and boost the requirements.”
Office records
In 2017, Birmingham topped 1m sq ft in office take-up. Savills estimates that 2018 demand won’t match this, but will hit 800,000 sq ft, with prime grade-A office supply at just 153,000 sq ft, pushing top rents up to £33 per sq ft and prime yields to 4.75%.
The biggest occupational deal this year was WSP signing for 47,000 sq ft at Brockton Capital’s Mailbox.
“We are seeing regional consolidation across the wider West Midlands and surrounding counties area,” says Ben Thacker, Savills offices director. “Corporate real estate teams are trying to do more things out of less office space, and are more focused on key, strategic hubs.”
Argent’s Paradise development will see 333,000 sq ft of offices delivered at One and Two Chamberlain Place and Ballymore’s Three Snowhill will comprise 420,000 sq ft, which will help bolster supply in the first quarter of 2019; although 150,000 sq ft has already been leased to PwC at Paradise. While resi has thrived in the centre this year, office occupiers, largely in the tech sector, have begun to look to fringe city pockets and less obvious locations.
Flexible, service-led demands
“Occupiers aren’t driven by the prestige of location, but by connectivity, amenity and quality of the building,” says Thacker. This means digital infrastructure, the community aspect and flexible landlord offerings. “You have a changing occupier profile – combine that with the fact that buildings are becoming viable in other locations, and the unlocking of sites by major infrastructure projects and private schemes such as Paradise.”
Bruntwood’s four buildings in Birmingham, which it operates largely on a flexible basis, are almost at full capacity. They include digital and technology campus Innovation Birmingham, which has three buildings each of more than 80,000 sq ft. Innovation Birmingham was rolled into a new £1.8bn, UK-wide joint venture with Legal & General last month.
Meanwhile, WeWork has instructed JLL to find office space for its debut in the city next year.
As with the rest of the UK, occupiers are demanding more flexibility and a more modern office offering. In order for Birmingham to maintain the momentum built up by HS2 and the short supply of space available, developers will need to adapt to ensure they capture pent-up demand.
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