Skip Ribbon Commands
Skip to main content

News Release

FEATURE ARTICLE

Global thinking puts Greater Birmingham on the map


BIRMINGHAM, 5th February, 2015 - Recent anouncements about ambitious new proposals to turn Birmingham city centre's Snow Hill and Colmore area into the equivalent of London's professional services district, Canary Wharf, creates a picture of a city that is confident in its future. Finally Greater Birmingham is coming together and we find out why investors and companies are now keen to hear more.

"2014 was a stellar year for investment in the region," says Ben Kelly, director of Capital Markets at JLL." Greater Birmingham investment volumes overall were up 19% at £1.04 billion, 86% ahead of the average for the 2008-2013 period. Of this £750 million was in Birmingham city centre and £350m of this was from overseas investors.

"These overseas investors to date have been mainly from North America, Continental Europe and Asia. Traditionally China and the Far East, much like the Middle East have only been interested in trophy assets - those attached to world famous names such as London and Paris. But now for the first time ever, JLL are bringing Chinese and Far Eastern interest to the Midlands and conversations with this part of the world and email traffic is up."

It's true, the city is attracting much more global attention. HS2 is pushing the city into the headlines and it seems that a day doesn't go by when Birmingham isn't featured in some top ten destination for investment, visitor figures, tourism profiles etc.

"It's not just about Greater Birmingham doing a good PR job though, " adds Kelly "If you look at employment figures, retail sales growth for the region and office rental growth, they really do stack up and not just in the UK but on a European level too.

Employment growth saw the Midlands among the leaders in 2013 and 2014, outpacing the UK average. Retail sales growth in Birmingham over the next five years is also predicted to be amongst the fastest in Europe, reaching nearly 2.5% per annum. And the office market in 2015 is set to see the re-emergence of rental growth, with 2.6% expected in Birmingham, the greatest of any UK regional city.

"To get us even further up the global rankings it's critical we think of ourselves as Greater Birmingham. Investors don't just think of Birmingham in isolation when they look to invest, they look at how the city region as a whole is performing. In the same token, we can't just think of ourselves in relation to the UK but must think Europe as a whole.

"When large investments such as One Snowhill have been marketed recently, investors were equally as focused on the underlying profile and GDP figures for the Greater Birmingham region, set in a European context, along with the usual analysis of key local office market statistics and trends."

Whilst HS2 is also clearly making a difference to the city's global awareness, it's the delivery of tangible infrastructure projects such as Midland Metro, New Street Station and the runway extension says Kelly, which is having the most significant impact now. "It's this that puts us at the centre of the national and increasingly international transport network."

The outlined improvement to the transport links as part of the new Snow Hill master plan makes for more exciting news for Kelly:  "An integrated transport network is one of the biggest single influencers for investors who look at the connectivity of the region. Plans for the revitalisation of Snow Hill station will strengthen Birmingham's position as a destination for national and international business, professional and financial services(BPFS) firms."

Kelly welcomes too the new West Midlands Integrated Transport Authority (ITA) and appointment of a new strategic transport director, Laura Shoaf. "This gives a clear message there is a more joined up approach in the region and a great message for us to take to investors."

The new strategic transport director will work across the seven local councils in the West Midlands and the three Local Enterprise Partnerships for the Black Country, Greater Birmingham & Solihull and Coventry & Warwickshire to champion transport provision in the region at the highest level nationally.

The New York born transport chief, with a background in urban planning is particularly passionate about how best the region can connect people and communities.

"It's vital,” says Laura "That we bang the regions drum at a national level to ensure we can shape a more efficient, more effective and more reliable transport network.

"Transportation is the lifeblood of the West Midlands economy and it doesn't stop at municipal boundaries. A strategic approach is essential to realise our collective economic aspirations, to connect people visiting the city not just for business, but tourism too."

Kelvin Craddock who is part of JLL's Tenant Representation team, who in 2014 was responsible for fulfilling Hogan Lovell's requirement to house its first regional office, also believes connectivity plays a crucial role in the region's future.

"Birmingham is increasingly being seen as a more modern, accessible and affordable city.  Many companies in the capital are now considering the loss of productivity from its workforces, jaded by the longer and longer commuter times required to access more affordable housing stock, as a key influencer to their property decisions.

"Combined with the rising cost of real estate and companies are now looking at how they can gain greater efficiencies in the regions, for which Birmingham currently offers an attractive proposition."

To investors, infrastructure investment flags up an opportunity for capital growth and combined with Birmingham being 100 base points below where it was in terms of yields at the top of the market in 2007, it offers a sign that their assets will move in the right direction.

Kelly returns. "At the beginning of 2013, Birmingham offered prime yields of 6.50 per cent.  JLL sold 84 Colmore Row 18 months ago which really signaled the turnaround of investor sentiment with the first sub 6% transaction for a number of years. Yields have continued to harden through 2014 and now stand at around 5.25% for the very best product.

"Then add in other ingredients such as a lack of office supply in the city and the potential for strong rental growth in 2015 and we believe that investors see that market sentiment is extremely positive and now is a good time to invest."

However, it's a fine balancing act, as this can also mean there are a lot of passive investors in the city, who seeing all these good indicators will sit on their assets.

"What we need is more speculative building. And talk of a futher 200,000 sq m of new office space being created in the city as part of the Snowhill proposals is just what we need to stimulate it.  The key will be to ensure it is delivered in a staggered and manageable way. 

"Whilst we believe the general election could mean some investors won't initially act on this news in Q1 and Q2, we're expecting a strong pickup in Q3 and Q4 and by that time, Greater Birmingham will have an even more compelling story to tell.