Huge public investment in transport and other infrastructure are creating massive opportunities for property and business investors in Birmingham and the wider region
By Frank Simpson
Being well-connected is as important for ambitious cities as it is for careers. Birmingham’s traditional advantage of being at the hub of England’s rail and road networks is being supplemented by billions of pounds in new transport infrastructure. No wonder it is gaining momentum as a target for property and business investors.
Birmingham was named ‘the most investable city’ in the UK by accountants PwC and the Urban Land Institute in 2015. Regional Observatory/the Department for International Trade considered it to have the best investment prospects for property in the UK, and the sixth most investable in Europe.
The UK’s second largest city is now first choice for people and enterprises leaving or expanding beyond London to find homes, corporate premises, prices, rents, skills and lifestyles to grow as individuals, families and businesses. 5,500 thirty-something Londoners made the move in 2015, according to the StartUp Britain national enterprise campaign.
The 210,000 ft2 national head office for HSBC’s new, ring-fenced UK bank at Arena Central, part of the Birmingham City Centre Enterprise Zone (EZ), will see around 1,000 jobs relocate from London from mid-2017. HSBC selected Birmingham for its proximity to London and being within easy reach of the bank’s 16m UK customers. The EZ encompasses 26 sites in seven clusters covering 68 hectares.
Greater Birmingham – spanning a total of seven local authority areas, including Birmingham and Solihull – lays claim to having the UK’s largest business, professional and financial services (BPFS) industry: more than 21,000 companies, employing 220,000 and generating £15bn GVA annually.
Across the Greater Birmingham & Solihull Local Enterprise Partnership (GBSLEP) area, 45% of foreign direct investments in 2014/15 were in the BPFS, IT and digital sectors, main target sectors for the Birmingham City Centre EZ.
More international BPFS companies in Birmingham include, among others: Deutsche Bank, which is recruiting to nearly double its workforce to above 2,000; US international architects Gensler; and American global law firm Hogan Lovells.
Historically, lack of Grade-A, fit-for- purpose offices limited capacity to attract more and larger business tenants; but recent and pending changes are tuning in property investors to billions of pounds’ worth of opportunities.
Office construction reached a 13-year high (969,000 ft2) in early 2016, according to Deloitte. Headline new investments this year include M&G Real Estate’s £200m forward funding of construction of international developer Ballymore’s 420,000 ft2 office development at Three Snow Hill, and pension fund CCPIB’s £75m acquisition of a stake in speculative buildings at Chamberlain Square. At 501,000 ft2, office take-up was the highest for any regional city in the UK in the first half of 2016.
Investor interest could be supercharged by construction start-up on Phase I of High Speed 2 (HS2) between London and Birmingham, scheduled to be completed in 2026.
Birmingham will be the hub for HS2 and is home to the construction headquarters for the entire project, which starts in 2017 and is expected to employ up to 1,300 people eventually in the city. The £907m Curzon Investment Plan, a 30-year strategy to unlock and regenerate 141 hectares of land around the planned HS2 Curzon Street Station in Birmingham, is the first major investment commitment by a UK locality to maximise the economic potential of HS2.
Led by Greater Birmingham & Solihull Local Enterprise Partnership (GBSLEP) and Birmingham City Council, the plan envisages 4,000 new homes and the unlocking of nearly 6.5m ft2 of commercial floor space. Presenting the plan at the MIPIM UK property investment conference in London in October 2016, its movers estimated it could add £1.4bn to the local economy.
£586.8m of the envisaged total is pledged by GBSLEP, and £137.2m will come from the West Midlands Combined Authority, whose constituent members include the seven local authorities in the region. An additional £183.3m funding will be sought to deliver light-rail/tram extension projects connecting Birmingham’s Eastside to its centre and out to Birmingham Airport and the town of Solihull.
The UK Central economic development hub in and around Solihull includes Birmingham Airport, The National Exhibition Centre (NEC), Jaguar Land Rover, Birmingham and Blythe Valley Business Parks, and Solihull Town Centre. A planned HS2 interchange station next to the NEC will bring UK Central within a 40-minute journey time of central London.
Other major projects in the city include: the £1bn Southern Gateway mixed-use development; a £600m development of the city’s professional centre around Snow Hill, which is set to create 2.2m ft2 of office space; the £500m Birmingham Smithfield, a new retail, leisure and residential space; and the Knowledge Hub, a new cultural quarter.
Birmingham’s current transport connections place 90%-plus of the UK market within a four-hour journey time. Commuters travel easily into the city’s three main railway stations, which are also on cross-country routes.
Birmingham New Street station services 140,000-plus people daily as the UK’s busiest interchange station. Its recently completed redevelopment increased annual capacity from 32m to 52m passengers annually. For businesses with London and Birmingham operations, the fastest rail journey between the two is 73 minutes. HS2 will shrink this to around 49 minutes.
The city is at the heart of England’s motorway network linking the M1, M5, M6, M40 and M42. £1.8bn of public funds are pledged to road improvements in the region up to 2020. National Express Coaches’ hub in Birmingham handles services from 500 locations throughout Europe and 1,200 in the UK. Birmingham Airport serves more than 50 airlines and upward of 140 destinations in the UK, continental Europe, North America and Asia. A 10-minute train ride from the city, it handled an all-time high of 10.2m passengers in 2015, and is investing £100m to improve its terminal building.
Civic leaders are bullish about growth and employment prospects. Councillor John Clancy, leader of Birmingham City Council, expressed confidence that the MIPIM UK event would provide genuine investment prospects. “By working in partnership across the region, we can get in front of the right people; ramp up Greater Birmingham’s economic resurgence and drive forward the local economy,” commented.
Councillor Ian Courts, deputy leader, Solihull Metropolitan Borough Council, predicted that the UK Central hub would provide a location with “strong potential for economic growth and a compelling investment destination”.
Birmingham’s new relocation service for the city centre EZ is run by inward investment agency Marketing Birmingham, supported by Birmingham City Council. It assists all potential EZ tenants while targeting BPFS, IT and digital media. “It has been critical to Greater Birmingham’s success that we target inward investment from sectors delivering the greatest economic value and employment opportunities,” said Neil Rami, chief executive of Marketing Birmingham. Growth firms are meanwhile relocating within the city. Advanced, the third largest software solutions provider to the UK market, moved its Midlands HQ to 45,000 ft2 offices in The Mailbox, a mixed-use complex which had undergone a £50m refurbishment. Advanced expects to employ 400 people there by late 2017. Extraenergy, a new energy supplier, has created 1,000 jobs over 12 months in the city centre.
The Black Country – west of Birmingham and including most areas of Wolverhampton, Dudley, Walsall and Sandwell – also offers attractive future investment propositions. It boasts the most successful EZ in England, stressed councillor John Reynolds, cabinet member for city economy, City of Wolverhampton Council. London-based property developers and investors Urban&Civic are to develop a £55m leisure-led, mixed use development at Wolverhampton Westside commencing in early 2018. £3.7bn of investments are under way or planned as part of Wolverhampton’s regeneration.