2021 Will Be The Year Birmingham City Centre Leaps Forward And Other Reasons To Be Cheerful

Yes, there are problems. Birmingham (and Sandwell and Solihull) are in the midst of a light-touch local lockdown and a second autumn wave of the coronavirus seems inevitable. No wonder Birmingham’s property business seems to have decided to keep its head down and hope the bad thing goes away.

But look closely at some slivers of good property news emerging over just a few days and it opens onto a vista of a more nuanced West Midlands property market. Three stories you could easily have missed reveal some real prospects waiting to be grasped. Bisnow helps put a smile on your face by identifying them.

2021 Will Be The Year For Birmingham City Centre

Birmingham’s Selfridge’s department store is about to look very different. Whilst a refurbishment is taking place the facade’s 15,000 silver disks will be replaced by very large pink, black and white dogtooth roses designed by Osman Yousefzada. Once the department store has been repainted in blue, the silver disks will be reapplied and the colourful hoarding removed.

Hammerson is behind this first refreshment the iconic building has had since construction was completed in 2003.

The makeover comes as Hammerson itself attempts a reinvention in the wake of the pandemic and longer-term retail trends. Last month it equipped itself with £552M via a rights issue, allowing the business time to think. Less debt and less retail are expected to be part of the new look, and in Birmingham this means a heavier emphasis on leisure uses at the Bullring.

However, the loss earlier this month of Simon Betty, the leading internal candidate to take over the Hammerson empire, who resigned to take a job elsewhere, may make life a little more complicated. He was widely expected to replace chief executive David Atkins.

Meanwhile, big developments are edging closer that will provide city centre landlords with new centres of gravity, new customers and new inspirations. Top of the list comes the Birmingham Smithfield scheme.

Lendlease was chosen as preferred developer for the former wholesale markets site in December 2018. Its plans for the 41-acre site include 2,000 new homes around a rethought market district.

Birmingham City Council forward plans reveal that both the award of the development contract and approval for the compulsory purchase order are scheduled for a meeting of the council’s ruling cabinet on 15 December.

Add to this the start of the main construction works for HS2, and 2021 will truly be a year to watch in Birmingham city centre.

Some Property Businesses Are Thriving

In normal times a 12K SF city centre office letting wouldn’t rate much more than a shrug, but if that deal is to a property consultancy that chose to expand when many of its peers are launching large-scale redundancy consultations, then it is well worth a pause for thought.

Carter Jonas has been operating in flexible floorspace at Two Snowhill for four years. Now it has decided to take a permanent base on the eighth floor to service clients including Highways England, National Trust and Homes England.

The Carter Jonas move comes as JLL prepares to shed 200 UK-based jobs, with Knight Frank, Avison Young, BNP Paribas Real Estate and CBRE also cutting their headcounts, the latter by as many as 250. Consultations on many of the redundancies are due to complete this month.

The secret of Carter Jonas’ success is its portfolio of infrastructure work and public sector clients. It is a lesson the transaction-based brokerage firms are already learning. 

The Shed Frenzy Has A Long Way To Go

Birmingham-based St Modwen has announced a 1.5M SF logistics floorspace development programme for 2021, including 285K SF in the Midlands, with Tamworth top of its list. Construction starts this month on two 48.8K SF units, which can be combined, and one 63K SF unit, all ready for occupation in June 2021.

It’s not difficult to see why St Modwen is keen. Since the business executed its beds-and-sheds pivot the numbers have been looking good. Industrial and logistics now accounts for 48% of the company’s total portfolio, delivering an attractive c. 8% yield on cost and c. 9% yield on incremental capital expenditure 

Investors are piling in, too. The prospect of acquiring Amazon’s 700K SF Rugeley depot is exciting bidders at an asking price reported to be around £85M, whilst yet more wait for a chance to grab a large Midlands regional offering from Legal & General as it picks this moment to sell from its £2.3B logistics portfolio. Yields hovering around 4% are now normal for grade-A logistics property stock.

Developers and investors with the right sites in their sights, and good timing, will be the stars of the 2021 commercial property market. If you want to make it in the Midlands property scene, get with the sheds.