KWB: HS2 is green light to property owners to refurbish and market office space in Birmingham
Due to complete by the end of 2014, HS2’s acquisition of 100,000 sq ft of office space at Two Snowhill is the largest deal of the year and could prove to be one of the most significant office lettings to happen in Birmingham city centre for at least a decade, if not far longer. It is anticipated that this will bring a plethora of companies in related business sectors, such as construction and consultancy, into Birmingham city centre, as well as companies looking to capitalise on the internal investments and economic growth forecast.
Waheed Nazir, Director of Planning & Regeneration, Birmingham City Council commented: “The recent announcements of the construction HQ and college are just the start of what is set to be huge economic gains for the city on the back of HS2. We are going to see significant growth in the supply chain and related rail activity that will seek to capitalise on the locational benefits of Birmingham to both phase 1 and 2 of the new HS2 line.
“Coupled with the growing interest from overseas investors and the strengthening of the business, professional and financial service sectors, the Birmingham office market is set to experience major demand for new floor space over the coming years. Now is the time for commercial property developers to push ahead with their schemes and so maximise the opportunities to attract investment and business to Birmingham.”
KWB Partner, John Bryce, said: “The much publicised shortage of Grade ‘A’ office space means that property owners who are bringing offices to market by way of refurbishment will do exceptionally well. The example here would be Bruntwood’s acquisition of the KPMG office building at 2 Cornwall Street. HS2 should give added impetus for considering more office schemes in Birmingham city centre.
“Refurbished office space is much more readily available, and whilst any new builds within Birmingham city centre will be several years in the planning and making, the trick for investors and developers will be that if you get your office space in good condition, through refurbishment, and market it, you will let it.”
A prime example is the current refurbishment work being carried out at The Mailbox, which is expected to come to market in the second half of next year. With the significance of its close proximity to New Street Station, The Mailbox redevelopment will include two office units of 25,000 and 18,000 sq ft, together with the new Harvey Nicholls at the back of the scheme and an enclosing of the retail element.
Speculative refurbishment has already experienced a good level of success during this past quarter. The joint venture refurbishment by Bridges Ventures and Evenacres at 158 Edmund Street offices in Birmingham has achieved five lettings totalling 19,386 sq ft in Q3. Circle Property and Hortons’ Estate have also recently secured occupiers in their Cheltenham House and Innovation Court developments.
At the start of what is a 10-15 year play, we are seeing merely the beginnings of long term strategies for regeneration and growth around Birmingham. The Development Academy established by HS2 for the training of specific skills related to the high speed rail project, which has been won by Birmingham and Doncaster, is one such scheme which shows long term commitment to the entire project. Suffice to say that the Birmingham landscape stands to change in the coming decade and beyond, but for now investment in pre-existing structures is a safe one.