Birmingham Remains a UK Commercial Property Hotspot
The UK’s second city has transformed dramatically over recent years and now Birmingham remains a UK commercial property hotspot. First came public services in the form of the new Library of Birmingham and Grand Central. With major upcoming projects including HS2, Paradise and Arena Central well on the way, there’s a sense of pride and optimism spreading across the UK’s second city. Now recognised as a property investment hotspot, Birmingham has clearly grasped the opportunity to become a major commercial hub for the country, undertaking a number of commercial developments.
Why Has Birmingham Remained a UK Commercial Property Hotspot?
Boasting the UK’s largest business, professional and financial services hub outside of London, Birmingham has attracted a constant and significant stream of inward investments, attracting the likes of HSBC and HMRC to set-up headquarters within the city.
This ripple effect is spreading throughout the commercial sector, as financial technology firms such as Falanx and Oxygen Finance take advantage of the huge potential market to expand into areas such as Digbeth. The advanced manufacturing sector also continues to perform well, attracting big names such as German firm Guhring, who recently opened a new site at the Advanced Manufacturing Hub in Aston.
With new commercial opportunities appearing across the city, Birmingham’s ‘Big City Plan’ that was put into place several years ago is in full swing. Increasing the size of the city core by 25% has meant a surge in the number of jobs sweeping into the city, with a forecast of more than 50,000 new vacancies appearing as projects are completed.
In a recent report, financial services firm PwC Midlands chairman Matthew Hammond described how “investor sentiment in the city has received a boost from the election of a new mayor, negotiations around a second devolution deal and the progress of many infrastructure projects taking shape.
“Birmingham still remains one of the highest-performing UK cities ahead of Edinburgh and London… It offers good value, unrivalled transport links and is located at the heart of the UK’s distribution network.”
With the number of active businesses within Birmingham up by 13.5% compared to 2016, three times the average UK growth rate, there’s no doubt that Birmingham is unrecognisable from 10 years ago.
The Midlands Engine
As a region, the West Midlands saw workforce jobs increase by 110,000 throughout 2017, the biggest rise in the UK. Home to 50% of the UK’s industrial stock, including major multi-national manufacturers such as Jaguar Land Rover, the Midlands Engine continues to thrive with Birmingham at its heart.
The city’s location, central to the UK, offers unrivalled links to key cities and towns across the whole country. Midlands-based supply chain companies can connect to 90% of the UK population within 4.5 hours drive, making Greater Birmingham a vital component in the growth of retail and e-commerce.
Birmingham’s location also provides easy access to a significant labour pool. Whilst the city alone has a population in excess of one million people, that number grows to over five million people within a 30-minute drive of the city, which is just under 10% of the UK population.
With all of this, in terms of retail Birmingham is prime for footfall and continues to attract top brands such as Cath Kidston, The White Company, Kiehls, Giraffe and Tapas Revolution. Birmingham also remains the only city outside of London to accommodate John Lewis, Debenhams, Selfridges, House of Fraser and Harvey Nichols.
Commercial Property Investment
During 2017, around 1.6m sq ft of Grade A commercial stock was under construction, 90% of which is ‘ground-up’ new schemes. Importantly, around 66% of the current pipeline is speculative build, showcasing the confidence building around the future of the city.
Coommercial property investors and developers are creating spaces that meet the needs of talented workers and occupiers are leaning towards those spaces to ensure they attract the talent.
As HSBC, Advanced, Deutsche Bank, Beasley Insurance and the Government Property Unit all secure significant space, including Birmingham’s largest pre-let in a decade, the number of cranes appearing across the skyline demonstrates Birmingham’s increasing commercial pulling-power.
With other major occupiers including RICS and HMRC, previous expert predictions of Birmingham bringing in ‘new blood’ have certainly rung true.
Commercial Rental Growth
Commercial rental growth has also seen a boost, with previously sub £30 per sq ft buildings achieving £30+ in the cases of One Colmore Square, The Colmore Building and the Cornerblock. New builds are also pushing mid-£30 rent, with predictions the rent threshold will soon hit £35 per sq ft. Schemes that were underway a year ago are now advanced or even completed and developers are adapting their buildings in terms of amenity and design, ideal for high-quality occupiers.
Due to the massive regeneration across the city, Birmingham remains a UK commercial property hotspot.
Figures source: http://content.knightfrank.com/research/1167/documents/en/the-birmingham-report-2017-5104.pdf