Midlands | Partnering Progress

2014 has been a spectacular year for the Midlands region as a whole. Regional property investment is up 70% on 2013, reflecting a renewed appetite for all sectors and an expectation that tenant demand for space will only grow.
Politically the most exciting development has been the discussion, following the Scottish Independence vote, on the potential for the devolution of greater powers to the wider Midlands region from Whitehall. In a ground breaking agreement Birmingham, Sandwell, Walsall and Birmingham have already come together to form a combined authority.

Solihull needs some more persuasion but will almost certainly fall into line in 2015.

Strategically HS2 is now a reality and the region will benefit from the two terminals that will be built at UK Central, a site adjoining the National Exhibition Centre (NEC), Birmingham International Airport, with its newly extended runway and International Station and at Curzon Street in Birmingham’s city centre. HS2 has agreed to take 100,000 sq ft of office accommodation in Two Snowhill for its head office, a major boost to the city’s economy in its own right.

Automotive driving manufacturing sector

The biggest news this year was Jaguar Land Rover (JLR) which opened its brand new, 1.3m sq ft, £500m engine plant at i54, on the outskirts of Wolverhampton. JLR will produce all its own “Ingenium” engines for the latest models from this plant, and will be employing some 1,400 people and creating a further 5,000 jobs within its supply chain.

Services need more space for growing workforce.

The opening of Deutsche Bank’s No. 5 Brindleyplace, a newly refurbished 130,000 sq ft office building, owned by Hines/Moorfield in the heart of Brindleyplace was one of the largest single lettings in the regional office market. Together with their occupation of No.1 Brindleyplace they employ over 1,500 people, which will grow closer to 2,000 over the course of 2015.

In Birmingham

Network Rail and Birmingham City Council’s complete redevelopment of Grand Central, the former New Street station and Pallasades Shopping Centre, has achieved its halfway milestone. In 2015 the works will be completed along with the opening of John Lewis’s 200,000 sq ft store that sits on top of the station and will be their largest store outside of central London.

Development ramping up

Speculative development has returned in the big shed/distribution market and is about to return in the office market. IM Properties has led the way with three speculative sheds of 169,000, 165,000 and 152,500 sq ft at Birch Coppice that have all been pre-let prior to completion.

The office market has also witnessed the first wave of speculative development. Paradise Circus, the 1.2m sq ft office, retail, and hotel joint venture between Argent/Hermes and Birmingham City Council, lifts off with the demolition of the former library in 2015 and a commitment that the first two office buildings totalling 340,000 sq ft will be built speculatively. Rockspring and Sterling Capital Ventures have acquired the former NatWest Tower at 103 Colmore Row in Birmingham city centre for a scheme that will provide a brand new 200,000 sq ft Grade A building, with demolition commencing in 2015. Bruntwood will commence the comprehensive refurbishment of 2 Church Street in Q1 to provide 100,000 sq ft of Grade A accommodation. Miller Developments are already demolishing the remaining buildings at Arena Central and are seeking funding for a 130,000 sq ft speculative office building.

Major investment in Midlands

The regional investment market has sprung into life across all sectors. The most notable deals were M&G’s £140m acquisition of Two Snowhill, a Grade A specification, 330,000 sq ft office building, from Hines at a yield around 5.75% and IM Properties’ sale of two distribution units at Birch Coppice for yields set near record levels at just above 5%.

Investor sentiment is very positive for the region and continued investor appetite is anticipated for the best quality institutional grade property.

Residential renaissance

Inner city living has returned throughout the region. Seven Capital is leading the resurgence of the sector, acquiring a further five former office buildings, totalling 1.038m sq ft, to provide over 1,250 units. The properties included Britannia House in Birmingham city centre, No.1 Hagley Road, Edgbaston and The Landmark, Water Front, Merry Hill. Owner and investor demand for their product has been very strong and continued growth in the sector is anticipated for 2015.

Over the course of the year our Valuation team has handled over 200 instructions, with an aggregate value of £2.25bn, reflecting the surge in activity during the year. We anticipate that this will continue and believe that 2015 is going to be a great time to do.

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