by Terry Cunnew
Through the first half of the 1980s Birmingham, along with most other parts of the Midlands, did not present a picture of blooming economic health. The office market was not exactly bustling, the industrial sector was abysmal and about the only area giving the property sector reason to keep hoping was the retail market.
But over about the past 18 months things have been steadily improving, according to agents in the local property market. Now, even the most hardened cynics are accepting that the light appearing at the end of the tunnel is not attached to the front of a train coming the other way.
Demand for both office and industrial space is rising, rents are improving for the best locations and things are now rapidly approaching the stage at which developers can seriously consider undertaking speculative projects.
An important factor in this renewed activity and confidence has undoubtedly been the improved economic outlook despite statements to the contrary based on political factors rather than actual performance.
But it is widely agreed among local property people that a major service has been done by the promotional efforts to make Birmingham the venue for the Olympic games. The attempt failed and it did cost a lot of money, but in property circles there is a strong view that the effort was not wasted.
The promotion work that was done has put Birmingham on the international map, and the positive factors that were pushed so hard in the effort to attract the Olympic games have proved, on the whole, to be factors which apply equally to international business interests seeking a base in the United Kingdom.
As a result, jobs are now potentially being created which stand a good chance of being very much more long term than those which the games might have created.
As the city’s development department points out, Birmingham’s coat of arms has the motto “Forward” and in the past few years a lot of effort has been put into trying to ensure that the city moves in precisely that direction.
Which is not to lose sight of the fact that the past few years have been far from easy and that recovery is not yet complete. The roots of the prosperity of the Birmingham and Wolverhampton conurbation lay in the 19th century and the boom industries of the Industrial Revolution.
In those days the industries of the region were at the forefront — they were the hi-tech market of the day. Today many of those industries have declined almost to the point of disappearance, and the period of transition to a revised economic base in the Midlands — indeed, in the country as a whole — has been a painful one.
But there is now a distinct feeling of confidence in both Birmingham and Wolverhampton property circles. Established businesses, both local and national companies, are looking to expand, while new inquiries are coming from tenants not previously represented in the area.
However, things have not reached the stage at which anyone can start ordering their second Rolls-Royce, and it would be wrong to suggest that a boom is bursting out all over.
Chesshire Gibson, for example, say that in the office market there has been a gradual pick-up, with a clear rise in activity during the latter part of 1986. The take-up, they note, was largely in suites or in parts of buildings, since little remains available in either single buildings or large floors.
The agents note that the market has been such that landlords are now taking a much keener interest in the management of buildings. It is being proved that money spent on upgrading entrance halls and other common parts is being returned in terms of increased rent levels.
Colliers Bigwood & Bewlay say that in their experience the rise in the market was detectable as far back as mid-1985 and that now office rents are on the upward path again. Their feeling is that rents will top £10 per sq ft during 1988, thus reaching a level at which speculative office development will again be feasible.
However, Colliers add that one problem at present is to attract the investors to put money into new developments. In common with many other parts of the country, Birmingham has been experiencing difficulty in this area, since the major investing funds are generally felt to have been concentrating virtually all their attention on London and the boom in the demand from “Big Bang” tenants.
On the other hand, Colliers do make the point that the bulk of the demand for offices has been for suites of varying sizes rather than for major chunks of floorspace.
So, although location and quality are still vital factors in considering any speculative office project, there seems to be a new factor which investors are increasingly having to face.
But in the view of Henry Butcher, the market now — both for offices and industrial property — is better than it has been for the past six or seven years. In response to that, the investors have little choice but to face up to the market demands both in looking outside London and the South East and in building with multi-occupation in view.
Even so, say Elliott Son & Boyton, the demand in the office market has not only risen in terms of volume, but also in terms of individual requirements for floorspace.
At the same time, there is little new space scheduled to reach the market this year, either in the city centre or in favoured suburban locations such as Solihull or Edgbaston.
In the view of Grimley & Son, the lack of new space coming on stream is such that the prospect is of a real shortage of office space of the quality now demanded by tenants in both Birmingham city centre and in Edgbaston.
Even in Wolverhampton, which is admittedly weaker office market, agents Bulleys say that they have a tenant for some 25,000 sq ft of offices on a good pitch either in the immediate area or on a motorway pitch, and they are having to look quite hard to find suitable sites.
There is, say Bulleys, a steady requirement for offices with reasonable parking provision, although it is the case that rents — currently standing at around £5 per sq ft for the best — have yet to reach a level to make a speculative development a realistic proposition.
Chesshire Gibson are quite emphatic in saying that in their view the Wolverhampton market is being underrated. The tenants are there and demand is such that there is now some pressure on rents.
The Wolverhampton market, they add, is more buoyant than many people imagine and there is expansion demand coming from many of the companies, both local and national, which are already established in the area.
Nobody is suggesting that the Wolverhampton office market is booming, but the point needs to be made that a market does actually exist and there are more potential users showing interest than is generally perceived.
Indeed, the market is strong enough to support a degree of new supply, as in the case of the Hampton Walk mixed scheme in Queen Square. This is a mixed shop and office project carried out by long-established local traders Alfred Hall & Sons, converting their own former premises.
Chesshire Gibson are the letting agents for the building, which includes some 4,500 sq ft of offices for which the asking rent is £15,000 pa.
The same agents are also acting for Norwich Union in letting St John’s House in St John’s Square, a modern building in which the entrance hall and common parts have been refurbished. It seems to have been money well spent, since Chesshire Gibson say that rents have since increased to around £3.50 per sq ft, compared with around £2 before the works were carried out.
Some 20,000 sq ft in the building was available, of which 6,000 sq ft is now let and another 6,000 sq ft is under offer.
Off St John’s Square, at 15-16 Bond Street, Bulleys are marketing a refurbished Georgian building which totals 2,938 sq ft. Here they are offering the freehold for £85,000, a long lease at £7,500 pa or individual floors at £3 per sq ft.
It is worth noting that upgrading of a building enhances rental levels in Birmingham, too, as shown by Chesshire Gibson’s experience at Edmund House in Newhall Street. Here the refurbishment of the entrance and common parts has had the effect of boosting rents from £4.50 to £6.50 per sq ft. In this building, dating from the late 1960s, only the top office floor and two showrooms remain to be let.
However, Chesshire Gibson say that the peak rent in the city so far has been the £8.50 per sq ft achieved in the Arthur Young scheme at Snow Hill. Their expectation is that top rents will hit the £10 per sq ft level with the next generation of buildings reaching the market in mid-1988.
Oncoming developments include the 40,000-sq ft City Plaza scheme close to the Bank of England; a 41,000-sq ft project by Guardian Royal Exchange in Newhall Street on which a prelet is expected to be announced shortly; four refurbishments in Colmore Row including one of 100,000 sq ft by Barclays Bank; and a 40,000-sq ft scheme by Scottish Widows in Edmund Street.
What is more, the agents say that the extent of the central office district is expanding, with a growing interest in the Broad Street area, where the International Convention Centre is proving a draw.
This in a sense will counterbalance what has already started happening at Snow Hill, where another two phases of the British Rail Property Board revitalisation programme are still to be built. This location has already established the top rent in the city and developers Viking are looking for prelets on the last phases of office buildings.
Currently, a multi-storey car park is under construction for the corporation. In addition, British Rail are reconstructing Snow Hill station and will be reopening the long-closed rail connection to Moor Street station.
Grimley & Son note that only two new buildings are scheduled to reach the market during the course of this year. These, they say, are the 35,000-sq ft Chamberlain House on Paradise Circus and Scottish Widow’s 30,000-sq ft project at 138-140 Edmund Street.
Chamberlain House is a project hard by the central library and the school of music, and close to the International Convention Centre.
Grimleys are also agents for what little remains to be let in Scottish Amicable’s 35,000-sq ft development at 1 Cornwall Street, which was completed last autumn. There, four floors were prelet to Thomson McLintock and two to Lloyds Bank, leaving only the ground floor available. The rents achieved were around £7.50 per sq ft.
One of Grimley’s more unusual instructions is 1 Lancaster Circus, the former West Midlands County Hall, for which they are agents with Healey & Baker. This is an airconditioned building of nearly 212,000 sq ft, refurbished, which is up for either sale or letting. Grimley say that they expect either a price of around £5m or a rent level of about £4 per sq ft.
Elliott Son & Boyton, who are agents with Weatherall Green & Smith for the Snow Hill development, say that in their experience not only are inquiries for offices up but so are the sizes of individual requirements.
Among other buildings, Elliott are agents for the Guardian Royal Exchange building at the corner of Newhall Street and Cornwall Street. This a completely new scheme of 41,000 sq ft with basement parking for 32 cars which is scheduled for completion in early 1988.
Although admitting that the building has attracted strong interest, Elliott decline to comment on the rumour that a prelet of the whole scheme is about to be announced.
Further down the line will be the refurbishment and extension of 75-77 Colmore Row to create over 18,000 sq ft of offices along with basement parking for 12 cars. Elliott are acting for Abbey National Building Society Pension Fund Trustees on this scheme, which will be completed in spring 1988 and is expected to hit a rent of over £8.50 per sq ft.
On the other hand, £6.50 is the rental target for the immediately available space remaining in Ulster Properties’ 60,000-sq ft Berwick House development in Livery Street. Elliott are joint agents with Jones Lang Wootton for this scheme, where 28,000 sq ft remains to be let.
Recent lettings have been to Ecclesiastical Insurance (for whom Natrass Giles acted) and to Schroder Financial Management.
St Pauls Square
An improving area in the city is the St Pauls Square district, a little to the north west of Colmore Row. This is the city’s only surviving Georgian square. Guardian Royal Exchange are among those to undertake schemes here, with their refurbishment of 36 and 38 St Pauls Square. No 36 totals 1,900 sq ft and no 38 contains 3,000 sq ft and, say letting agents Elliott, both are now under offer.
Quoted rents are £5.25 per sq ft.
Alexander Stevens Druce have also been involved in St Pauls Square, starting back at the end of 1984 when they acted for Linread in disposing of surplus and largely derelict property at nos 21-24. This was sold to Purelord, who divided the site into five self-contained buildings. One of these they sold to estate agent Jim Hofton, who restored it, took the first floor himself and let the ground floor and basement through Alexander Stevens Druce at £8.75 per sq ft.
Another unit was sold to Dictionframe, an associated company of which subsequently bought further space to the rear which is now mainly occupied by Tempus Computers, who have let part of their space to the original owners, Linread!
ASD also acted for Purelord in buying the freehold of 13-20 St Pauls Square, which was let to the Belfast Ropework Co. They then negotiated a surrender of the lease, along with a license to occupy until the end of the last year.
The agents then sold nos 13-14 to Midland & General Properties, who plan to refurbish them for office use, as well as building another three self-contained office buildings at the rear.
ASD have now also secured planning consent for the conversion of nos 15-20 to a pub, and have contracted to sell the property to Wolverhampton & Dudley Breweries.
The remainder of Linread’s holdings on the north side of the square have been sold to Cadoc, who have in turn retained ASD to carry out a break-up operation. So far three parts of this property have been sold and another two have gone under offer.
Rather more substantial and modern is the 62,450-sq ft Embassy House in Church Street, which is being marketed through Elliott Son & Boyton, Chesshire Gibson and Bernard Thorpe & Partners. Rents in the building are around £7 per sq ft and at present some 44,000 sq ft is available, although around 10,000 sq ft is under offer.
Also with about 44,000 sq ft remaining is Norwich Union’s Civic House at the junction of Great Charles Street and Paradise Circus. Jones Lang Wootton and Colliers Bigwood & Bewlay are joint agents for this development, which did get off to a slow start in lettings. However, the sixth to tenth floors are now let to tenants including Midland Bank, the Percy Thomas Partnership, Halifax Building Society and Provincial Insurance.
There is also interest in the balance of the space, with talks at around £6.50 per sq ft.
Henry Butcher & Co are acting, among other things, as agents for two office buildings which they acquired on behalf of RVB Investments, a Channel Islands-based family trust. One is Albany House in Hurst Street, a 50,000-sq ft-plus building, which RVB have upgraded. The 1960s building is being let in small suites which are making around £4 per sq ft, reflecting a rise of some 28% over the past 12 months. Only about 1,800 sq ft is currently vacant.
Also letting in suites is George Knott House at 119 Holloway Head, which again has been refurbished by RVB. Henry Butcher say that there is very little space left in the building, which has attracted rents around £4 per sq ft.
RVB say that their investment philosophy has been to put their money in modern buildings at affordable prices, which is why they have tended to target the Birmingham region rather than London. What they are trying to put together is a balanced portfolio, although their feeling currently is that the retail sector has already seen much of its growth potential and that for the present there might be stronger growth prospects in office and industrial property.
In the suburban office market, one of the strongest locations is Edgbaston, which has attracted considerable tenant interest. A demonstration of this is MEPC’s development in Broad Street, known as simply as The Square. This is a complex of 14 self-contained buildings ranging from 2,600 sq ft to 8,105 sq ft and agents Grimley & Son have let 50% of the scheme in just two months and are confident of getting the rest away by the end of the first quarter.
Rents are pitched at £7 a sq ft.
Grimley are also agents for A & J Mucklow Group’s new development in George Road, Edgbaston, jointly with Elliott Son & Boyton.
This development is known as The Cloisters and is again a complex of self-contained buildings. It totals 18,500 sq ft in 10 buildings from 1,800 sq ft and will be ready for occupation towards the end of the year. Rents will be over £7 per sq ft.
An older building is Calthorpe House in Hagley Road, a 1960s development, where about half the space was vacated by the tenant. PHIT carried out major refurbishment, including the installation of raised floors.
Agents Colliers Bigwood have now let all but about 900 sq ft of the vacated space in suites from 500 sq ft, at rents from £4 per sq ft.
Lyndon House, also in Hagley Road, was another 1960s building from which a major tenant moved out in the late 1970s. In the end vacant possession of the whole 65,000-sq ft building was acquired and the building was refurbished by owners Eagle Star Properties.
National Giro Bank have moved into some 32,000 sq ft of the building, which is being let through Colliers Bigwood. All but two suites of the balance are left and the agents say that recent lettings have been at about £4 per sq ft.
Another popular office area is Solihull, where Bryant Properties and Prudential Pensions have just completed their development on Warwick Road, known as The Courtyard. This scheme totals 43,350 sq ft in the nine self-contained buildings, of which only one was not spoken for before the development was completed at the end of January.
Joint agents Chesshire Gibson and Elliott Son & Boyton have signed such tenants as British Olivetti, Racal Vodac and Nytech and expect to let the remaining 5,400-sq ft building at £8 per sq ft.
Alliance’s refurbishment of the 80,000-sq ft Broad Oaks building in Streetsbrook Road, Solihull is coming on the market at the start of next year.
The building was formerly the headquarters of Land Rover UK, from whom Sun Alliance acquired the leasehold interest. Alexander Stevens Druce acted for Sun Alliance in the purchase and will be letting agents for the building. Elliott Son & Boyton acted for Land Rover in the negotiations.
ASD are also acting for Sun Alliance in the sale of their former regional headquarters at Beaxon House, Hall Green. Chesshire Gibson are joint agents on the 58,450-sq ft building, which includes a 6,200-sq ft air-conditioned computer suite along with parking for 110 cars.
Sun Alliance moved out some months ago following their merger with Phoenix Assurance, after which both companies moved to offices in Colmore Court at Snow Hill.
In the industrial market, Henry Butcher say that they see a feeling of greater confidence. They have a number of clients wanting to move to space of around 50,000 sq ft.
What is more, there are those who are finding difficulty in fulfilling requirements for space between 60,000 sq ft and 250,000 sq ft.
One of the results of major changes in the economy is that recent years have seen the demolition of many larger units, or their sale on a freehold tenure, with the result that the supply of larger units for letting has become limited.
A recent example of a major freehold deal was the purchase by Butcher on behalf of Autobase of the former London Works Steel Co complex at Tipton Road, Tivendale. Chesshire Gibson were the selling agents for this 460,000-sq ft complex on 38 acres, for which the asking price was around £2.5m.
It is to be operated as one of the biggest vehicle salvage and reprocessing plants in the country.
In another transaction, Butcher acted for the PSA in disposing of the Manpower Services Commission’s lease on a 110,000-sq ft modern unit on 6.88 acres at Castle Bromwich. The lease was taken by Regency Windows, who have thus virtually doubled their Midlands floorspace.
Currently, say Butcher, the bulk of demand has been to the east of Birmingham and on the M5 and M6 motorway routes. To the west, they say that Wolverhampton has had a difficult market but has now improved, a view which is supported by Wolverhampton agents Bulleys.
Bulleys currently have the management of about 2m sq ft of industrial accommodation and, prior to Christmas, they had nothing available on any of the estates they manage exceeding 10,000 sq ft.
The supply is better now, say Bulleys, but the market is busier than it has been in years. In contrast to the times when the market was at its nadir, agents now expect to get some response when they put space up for letting.
Even so, there is still slack to be taken up and the improved levels of activity have yet to be reflected in rental growth.
Currently, say Bulleys, an 8,000-sq ft unit will let at perhaps £1,85 per sq ft, but rents would need to reach around £2.50 per sq ft to make new development feasible. That sort of rent has been achieved only for the best of nursery units.
Where buyers are keen, it seems that they can be very keen indeed, as was the case when Bulleys recently sold a 4,500-sq ft unit in Bridge Street, Wolverhampton. The deal was completed in just two working weeks, and vendors Appollo Designs got close to their asking price of £65,000.
In another recent deal, Bulleys acted with Michael Tromans & Co in letting 18,000 sq ft of space on the Racecourse Industrial Estate on behalf of Banks’ Brewery. The space has been taken by Granada TV Rentals, leaving a further 21,000 sq ft to be let at an asking rent of £1.25 per sq ft.
At Wednesfield, Bulleys and Henry Butcher are joint agents for one of the few buildings currently available on the Planetary Industrial Estate. This is a 10,925-sq ft unit held at a current rent of £17,480 pa, and no premium is being sought.
In recent lettings at Planetary, 19,000 sq ft, has been let on a 10-year lease at a rent rising from 90p in the first year to reach £1.29 per sq ft in the third. Another letting, of 19,900 sq ft has been agreed on the basis of a rent of £1 per sq ft in the first year followed by £1.25 for the next four years.
Rents for good industrial space in Birmingham, say Chesshire Gibson, are now on the increase and over £3 per sq ft has been achieved for design-and-build projects.
Demand, in Chesshire’s experience, has been for high-quality rather than hi-tech space, built to around 17,500 sq ft to the acre and with good parking.
At the start of 1986 there was still a fair supply of good industrial space in the city fetching rents around £2.50 per sq ft. It was the tenants who had the choice and who could force concessions.
But then things started to move; most of IMI’s Holford scheme found takers, with over 240,000 sq ft now let during the past 12 months, and rents have started to come under pressure as this and other schemes have been taken up.
Now, say Chesshire Gibson, units of around 5,000 sq ft in the Birmingham Factory Centre at Kings Norton are fetching rents of £2.65 per sq ft. This is a development by Slough Estates for which Elliott Son & Boyton are joint agents.
Purpose-built freeport
The rising market is also reflected in the Birmingham Freeport development, which Chesshire Gibson instance as the only purpose-built freeport in the country. This is a joint Slough/Prudential investment at Birmingham International Airport and close to the National Exhibition Centre.
Chesshire Gibson say that phase one, completed in October, totals some 167,000 sq ft, of which about a third is either let, under offer or the subjects of serious talks. The Prudential, report the agents, will be holding on to the investment, which amounts to some £5.5m on the first phase. The final scheme could extend to another 20 acres.
Work is also starting on Mucklow’s Forward Park development at the head of the Aston Expressway on the site of the former Midland Counties Dairy. This is a scheme of 55,500 sq ft in three blocks, in what Chesshire Gibson describe as a very strong location on the edge of the city centre.
It is designed to be a top of the market development and is understood to have attracted considerable tenant interest in advance of its completion in October next.
Elliott Son & Boyton in fact identify the Aston Expressway as an industrial growth area, along with the motorway pitches south and east of the city.
The same agents bear out the view that rents are rising as the supply of quality space declines. In Elliott’s view rents need to reach about £3.25 per sq ft to spark off new speculative development, and their feeling is that they should hit that level over the next 12 months.
Currently, however, in Elliott’s experience the market over the next 12 months is likely to be mainly on the prelet side for quality schemes, since it is still essential to have a tenant already lined up to do the deals at the moment.
Grimley & Son stress that Birmingham does attract users for big warehousing units, since the city is so well located as a distribution centre. Aside from that, it is the service and light-industrial sector which tends to make up the main strength of the market.
Meanwhile the modern, hi-tech types of industry seem more intent on making for Solihull.
Even so, it is Birmingham which is seeing the rental growth so far, with rents either static or showing relatively small, rises in other localities around the area.
But the developers are clearly in the market and are confident enough to take on projects in the right locations. A case in point is Arlington Securities’ Birmingham Business Park, close to the National Exhibition Centre.
This is a scheme of up to 2.4m sq ft of mixed office, R & D and production facilities on a site of 195 acres which will be about 40% landscaped.
Work is expected to start on phase one, of 100,000 sq ft, later this year, and subsequent phases will include both purpose-built and speculative buildings, either freehold or leasehold, so giving architectural variety to the project.
On a distinctly different tack, British Rail Property Board are finding a healthy market for that most traditional and underrated commodity, the railway arch.
And one of the locations where they are marketing arches brought up to the standards of the 1980s is at Snow Hill — the same Snow Hill where the highest office rents in town have been recorded.
However, the railway arch of 1987 is a rather different thing from the grimy and unlovely hole in the wall that used to typify the species. Today BRPB’s refurbished arches are modern, comfortable, high-quality locations which attract small, clean industries rather than the car wreckers of the past.
The arches range from 1,000 sq ft to 2,500 sq ft and they are now attracting quality tenants at respectable rents — in the £2.20 to £2.30 per sq ft range. Indeed, since the city council is generally cooperative on the planning side, one of the arches at Snow Hill is now a night club.
But BRPB are also doing a lot to change Birmingham’s retail scene. At Moor Street, they and joint development partners R M Douglas have submitted a planning application to carry out a retail development of the old station site, following the completion of the construction of the new one.
It is unlikely that work on this shopping scheme will start for another 12 months, but the aim is to create a covered shopping centre which will extend the existing retail provisions.
There are also plans to create extra trading units at New Street station as part of a general upgrading of what at the moment presents a very poor picture as the main terminus of one of the nation’s leading cities.
At New Street there is a general intention to upgrade to create a station more fitting for its role, which will include efforts to revise existing pedestrian flows and to exploit currently wasted space to provide more trading units to serve passengers.
A similar idea is in mind for Wolverhampton station, although there, since the station is much more divorced from the city-centre shopping, there is not such a need to adjust to market pressures as at New Street.
In fact, anything BRPB do at Wolverhampton station is most unlikely to affect the city-centre shopping.
What will affect the retail market is likely to be the refurbishment of the Mander Centre, a long-overdue programme in the eyes of many.
The Mander Centre is a strong focus of Wolverhampton shopping, but for some time there has been a need to bring it up to modern standards.
But Chesshire Gibson take the view that whatever is done to upgrade the Mander Centre, the main shopping pitch on Dudley Street will not be diminished. The unit at 3 Dudley Street was let to Benetton at over £45 per sq ft zone A and, even though there is some feeling that this might have been a fairly strong rent level, it is estimated that the general prime rate in Wolverhampton should be in the £40 to £45 per sq ft range.
In fact, Chesshire Gibson are involved in a new development already mentioned, the Hampton Walk scheme being carried out by Alfred Hall. Aside from the office content, the project has seven ground-floor shop units ranging from 200 sq ft to 890 sq ft, along with first-floor retail element which has been let to a hairdressing firm.
Apart from that, two units are to be occupied by Nationwide Building Society and by the developers themselves, and negotiations are in hand on three of the remaining groundfloor shops.
The development is reaching completion and Alfred Hall apparently intend to sell the investment at the end of the day.
Back in Birmingham, perhaps the biggest refurbishment and upgrading project to date has been the transformation of what used to be the Birmingham Shopping Centre over New Street station.
Owners Norwich Union have spent £2m to date on creating a new image for what is now known as The Pallasades, a programme which Norwich Union’s agents, Grimley & Son, say is aimed at recapturing the status of the centre.
One of the Pallasades’ advantages is that it is over the station and provides one of the main entrances from the chief office area of the city. The pedestrian flow is consequently more than a little impressive and traders who cannot siphon off at leaset a bit of that flow are probably in the wrong business.
Grimley & Son say the centre is strong enough to support rents of £50 per sq ft.
Some critics of The Pallasades say that what has been achieved is simply cosmetic and only raises the costs for the tenants, but on the other side there are many who welcome what is being done as a valuable improvement which is greatly to be applauded.
Adjoining, and linked to, The Pallasades, is the Bull Ring Shopping Centre, which at present either still belongs to Laing Properties or has been sold to London & Edinburgh Trust. Birmingham retail specialists Johnson Fellows are agents for Laing Properties, and, inevitably, are not at present in a position to throw any light on the matter.
A problem for the Bull Ring is that over the years it has earned a reputation as something of a no-go area because of the gangs of youths which have tended to congregate there.
However, Johnson Fellows say that this problem has been over-stressed in the local press. In any case, they add, the general description of “the Bull Ring” covers a whole area of the city aside from the shopping centre itself, so that the centre has tended to suffer by association from events not actually occurring within it.
Whatever the case, if the LET deal goes through it is a clear indication of confidence in this sector of Birmingham’s retail market. It is also, in most eyes, a clear indication that the Bull Ring centre is next in line for the sort of upgrading which The Pallasades has already seen.
There is no doubt that the Bull Ring centre is now in need of updating, whoever ends up owning it.
In contrast, the Royal Insurance/Bryant Pavilions development at the corner of High Street and New Street is one of the really prime projects currently under way in the city. This is a four-level, climate-controlled scheme of 250,000 sq ft. This scheme will be linked to British Rail’s new Moor Street station.
In addition to this is the City Plaza project, a £20m scheme by Ladbroke City & County in Temple Row. This scheme will provide 55,000 sq ft of shopping, along with 45,000-sq ft of offices, and it is scheduled to be opened for trading in the autumn of 1988.
Grimleys say that speciality shopping is the flavour of the month and that many traders are looking to the Pavilions and City Plaza schemes.
This, say Chesshire Gibson, has tended to some extent to deaden the market as potential tenants have been delaying decisions pending the opening of new schemes.
Chesshire Gibson put prime rents on High Street at around £90 per sq ft zone A, while Grimleys go a little higher, saying that the best is from £90 to £100 per sq ft.
Rival pitches on Corporation Street and New Street can be expected to make £60 to £75 per sq ft.
However, Johnson Fellows say that they have heard of rates going as high as £110 per sq ft zone A in the Pavilions development, which can hardly come as bad news for the developers.
On a smaller scale than the Pavilions and City Plaza projects is the city council’s Fletchers Walk shopping centre at Paradise Circus, linking Broad Street with New Street and likely to benefit more than a little from the Convention Centre scheme.
This scheme has up to 14 retail units, and letting agents Chesshire Gibson say that they have firm interest or actual lettings for all but one unit.
Outside Birmingham, the biggest development planned in the region — indeed, it is claimed to be the biggest in Europe — is Color Properties’ 110-acre Sandwell Mall in Wednesbury.
This £500m scheme will total some 5.5m sq ft, of which about 2m sq ft will be devoted to shopping, with over 800 shop units. There will also be a series of leisure attractions including a water park and a fun fair.
Wilson & Partners are the letting agents for Sandwell Mall, which is forecast to attract some 22.5m visitors a year.
Good retail demand
Proposals have also been made by Australian retail developers George Harris & Associates to develop the Fort Dunlop site as what they have dubbed Forth Shopping Town. A planning application has been submitted to Birmingham council for a development with 1m sq ft of quality retail space plus a 250,000-sq ft retail park.
There seems to be a clear demand for shopping space judging by Bryant Properties’ experience with their Kings Heath development. Johnson Fellows, who are joint agents with Shearer & Partners, say that three prelets have been agreed in the High Street scheme, even though work has only just started on the development.
Freeman Hardy & Willis, Foster Bros and Adams Childrenswear — all subsidiaries of British Shoe Corporation — have all taken units in the scheme, which contains 12 units totalling 50,000 sq ft, along with a 3,000-sq ft extension to an existing Presto supermarket.
Johnson Fellows are also agents on the smaller Scrivens House development in High Street, Harborne, recently completed by Scrivens Opticians. Three of the four units in this scheme have been taken at rents around £18 per sq ft zone A.
Another project in the mega-development league is Richardson Developments’ 100-acre Merry Hill scheme in the Dudley Enterprise Zone.
Grimley & Son, who are joint agents with Mason Owen & Partners, say that phase one, totalling 160,000 sq ft of retail warehousing, started in 1984. It opened last March and is fully let to tenants including MFI, Vallances, Jolly Giant, Texstyle World, Halfords, B&Q and Queensway.
Phase two, also complete and trading, includes a 110,000-sq ft Carrefour plus 50,000 sq ft of unit shopping, while phase three provides another 220,000 sq ft of retail warehouse space, most of which is also open and trading.
The fourth phase, totalling 38,000 sq ft of shopping, speciality kiosks and a food hall, is under construction and will extend phase two.
Grimleys say that the fifth phase, of 1.2m sq ft, is hoped to be open for trading for Christmas 1989. It will include a mainly two-level covered shopping mall anchored by Debenhams with a 120,000-sq ft store. It will contain another major store, unit shops, specialty units, food courts, a children’s village and a 10-screen cinema, with other leisure activities. All this, and no rates to pay until the 1990s!
On the whole, one could say that there is rather a lot happening on the retail front in and around Birmingham.
Indeed, one could say that there is rather a lot going on in all sectors of the market. Even allowing for the fact that property people tend by their nature to be optimistic, there does seem to be a greater confidence in the market.
