Around 90% of Birmingham city centre office development pipeline is speculative, reflecting the city’s high rate of take-up.
According to Knight Frank’s latest Birmingham Report, the figure reveals an unprecedented level of confidence in the city’s future among developers and property investors.
No new grade-A city centre office space has been delivered since Two Snowhill and Five Brindleyplace were completed in 2013. Over the next three years, stock figures will be boosted through a mix of new schemes and major refurbishments. Some 90% of this total is speculative build.
Demolition work is underway to prepare for One and Two Chamberlain Square at Argent’s Paradise development, which will form the first tranche of new space. Accountancy giant PwC has prelet 90,000 sq ft at Number One.
Meanwhile, with a £200m funding agreement in place, Ballymore and M&G’s Three Snowhill is going ahead. The 420,000 sq ft final phase of Snowhill will complete in 2019 along with the unveiling of Rockspring and Sterling Property Venture’s 26-storey 103 Colmore Row.
Refurbishment projects on site include Freshwater Group’s renovation of 10 Temple Street, which is the closest to completion. IM Properties’ redevelopment of 55 Colmore Row and Bruntwood’s renovation of 2 Cornwall Street will follow within the next few months. These schemes combined will deliver 260,000 sq ft. A similar level of speculative space is due in 2017, headed by Legal & General Property’s refurbishment of the Lewis building.
With Evenacre’s 102 New Street refurbishment expected to complete in Q1 2018, a total of 579,000 sq ft of speculative grade A space will come to market between Q4 2016 and Q1 2018.
Overseas capital has accounted for 30% of all office investment in the city since 2011, said KF, attracting investment from countries including the US, Canada, Germany and France. The US and Germany have acquired £1bn and £0.5bn worth of assets respectively.
Ashley Hudson, head of Knight Frank’s Birmingham office and capital markets team, said: “Against a backdrop of higher asset prices in London, Birmingham is ideally placed to soak up capital.
“The continued weakness of sterling is likely to heighten overseas investment interest in Birmingham.”
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