How Channel 4 Coming To Birmingham Could Change The City's Real Estate Market

The decision on a potential Channel 4 relocation to Birmingham could be just days away, as bosses at the publically owned terrestrial broadcaster prepare to give in to ministerial pressure to spend more time and money in the regions.

Today just a third of all TV jobs and spending is outside London and just a miserly 1% of the U.K.'s £2B television production budget is spent in the Midlands. If that grew, what kind of media hub would Birmingham become? And does the city have the right kinds of property at the right kinds of prices?

"Gogglebox" and "Bake Off", "Hollyoaks" and "Big Brother: Channel 4" has given the world many treasures. But it has not given many to Birmingham.

A city that was once a major media production hub with credits from "Top Gear" and "Gardeners' World" to more forgettable output like soap opera "Crossroads", has dwindled to almost nothing.

To be fair to Channel 4, it has spent more in the U.K. regions than it was asked to - and more than the average among U.K. broadcasters. Data suggests they spent 40% of their budget in the regions, against  a target of 35%. But moving the broadcaster — today occupying 161K SF at Horseferry Road, Westminster — would change the game entirely. A Birmingam HQ would mean a broadcasting revolution.

Conservative West Midlands metro Mayor Andy Street is credited with persuading his Conservative ministerial colleagues of the case for relocation — and it is certainly true they want to help him claim what could be a £5B economic win.

Beyond the politics, a Channel 4 relocation also fits in with Street's digital-lead strategy for regional growth.

"The golden thread of digital links all our growth sectors," Street said, speaking last month at an event in Birmingham. "We've already got BBC3 relocating to Birmingham from London — and remember that it is the corporation's most cutting edge channel — and hopefully we'll also get Channel 4 because there is a real campaign to persuade them to come to us."

So if they came, where would they go, and what effect would it have?

The potential answer: Digbeth and the Jewellery Quarter, which would be changed forever.

Whilst nobody knows where Channel 4 would go — and sites at U.K. Central, Solihull, have been canvassed — according to some observers a move to areas like Digbeth/Jewellery Quarter, areas that already have a strong media presence, would produce the greatest economic benefit.

“You could see Channel 4 being a very helpful tenant for new speculative office schemes like 3 Snowhill, but it’s perhaps more likely Channel 4 would go to areas which already have TV occupiers — businesses like Maverick who are in the Digbeth/Jewellery Quarter area,” Cushman & Wakefield Birmingham Head Scott Rutherford said.

Global media businesses like Maverick TV are in Los Angeles, London and Birmingham’s Progress Works, part of the 15-acre Custard Factory creative quarter bought in June by Oval Real Estate.

Rents in the area hover around £10-£15/SF said Rutherford, ideal for small-time media businesses.

“Digbeth/Jewellery Quarter is where you could see more obvious spin-offs for a Channel 4 relocation, and the channel would be glad to be able to show they’ve changed city — and changed the city they’ve moved to. You could see media occupiers clustering around then there, creating a kind of media village,” Rutherford said.

“You might even see Channel 4 going to a site like the Wholesale Markets — a pre-let to them would be a great way to underpin development.”

The 34-acre site at Smithfield is already being prepared for a £1B development.

Birmingham City Council is now shortlisting developers for the market's site, and announcements are due soon.

What about the mainstream office market? The BBC occupies around 100K SF at the Mailbox, where it produces shows including long-running rural radio soap "The Archers". Channel 4 is expected to require another 100K SF, maybe more.

However, there could a be substantial spin-offs for the serviced office sector.

Flexible and co-working provision is already growing rapidly in Birmingham, but Channel 4’s arrival would make it turbo-powered said Ashby Capital Chief Executive Peter Ferrari.

“Channel 4 is going to bring in its wake a great many smaller businesses who will want flexible space,” Ferarri said. “At our Colmore Building we inherited a serviced office suite that had 60% occupancy, that has now grown to 100% and as a result we’re looking to double the floorspace which is currently 16K SF. That’s a measure of how fast the sector is growing.”

“The difficulty is that new serviced and flexible providers looking to move into Birmingham confront the fact that there is just 350K SF of Grade A new floorspace available. Simply, serviced office operators are going to find it hard to find the space they want.”

Research conducted by KPMG for West Midlands Growth Co. suggests Channel 4 could be seriously big business.

“The direct benefit to the west Midlands could be worth £2.3B in additional GVA in the period 2021-2030, and another £2.7B in indirect benefits through media clusters, over the same period. That is not insignificant,” West Midlands Growth Company Chief Executive Neil Rami told Bisnow.

There is growing pressure to get detailed about locations. “I think now is the time to start offering Channel 4 a portfolio of Birmingham sites — because Birmingham, on the face of it, seems the natural fit for Channel 4. Today, of course, there is nothing of the scale they need,” GVA Senior Director Charles Toogood said.

Rami would not be drawn on the likely locations, and said as yet no work has been done on detailed site analysis. But he did warn that a simple transfer of Channel 4’s 161K SF London base to Birmingham was unlikely.

“As Channel 4 become accustomed to operating outside London so their business model will evolve — so they may not need the same type of space they have in central London,” Rami said. “We haven’t yet done a detailed analysis of sites but there is absolutely no doubt that whether they land in Solihull or Coventry or Birmingham, we can provide the right kind of property. In fact, property is probably the least significant issue here. Talent and recruitment matter much more.”

Birmingham is already home to a cluster of broadcasting names, a list that grows longer as the BBC begins to recruit for its online channel, BBC3, now growing at Fazeley Studios, and its youth news service. BBC Asian Network broadcasts regularly from the city — and the independent production sector is growing, too.

"Birmingham would be a fantastic base for Channel 4 We have record numbers of young relocators out of London of any regional city," British Council for Offices Birmingham-based committee member Philippa Pickavance said. "We have the variety of sites, the office buildings, a welcoming attitude, we are in the heart of England with glorious countryside in all directions within a 20-minute drive. We have culture, sport and multiple housing stock still at well below south of England prices … what's not to like."

There are plenty in Birmingham who hope Channel 4's board see it this way, too.