Is HS2 Coming Off The Rails (And Should Birmingham Property Worry)?

Earlier this week WSP, the engineering consultancy, moved 700 staff into their new 47K SF office at Birmingham's Mailbox. It is a sign of how the HS2 high speed rail project is already changing Birmingham's office property market.

But the move comes as fresh doubts are cast on the entire HS2 project by no lesser figures than Transport Secretary Chris Grayling and the head of HS2, Sir Terry Morgan.

How seriously should the Birmingham property business take these remarks? Bisnow finds out.

WSP are among the biggest beneficiaries of the plan to run a new high speed rail network from London to Birmingham and the north. The engineering consultancy is advising on a host of HS2-related projects including plans for the Birmingham Curzon Street HS2 station (stunning design details were revealed last month, and construction plans are well advanced). Although they have signed up for an initial 47K SF at the Mailbox they have an option to take a further 55K SF, a sign of their confidence and the huge reach of the HS2 plan.

Simultaneously plans to make the most of HS2 outside the city centre are also moving briskly forward. Birmingham City Council has pooled its land and know-how with other landowners to back the 350-acre Arden Cross site. Waheed Nazir, Birmingham City Council's corporate director for the economy, is to become chairman of the newly formed joint venture.

This activity is ahead of a projected opening date of 2026: you can find the official timetable here, showing the start of main civil engeering work planned for 2019.

Yet despite the activity, deep below the surface all is not well with HS2, as a series of remarks from senior political and industry figures show. They come as no surprise to some of the cannier players in Birmingham's property business who openly contemplated life without HS2 at the Bisnow Future of Beds in Birmingham event in September.

They also echo concerns reported by Bisnow in September about discrepancies in the timetable for the HS2 line north of Birmingham.

So what are the latest concerns, who said what to whom? There are two inter-linked problems, neither of which Birmingham can ignore.

1: The Northern Spur Is In Doubt

Doubts are growing that the HS2 line north of Crewe (phase 2b) will be built. It is hard to see exactly how deep the threat goes, but it appears to focus more on the Birmingham via East Midlands to Leeds and Sheffield spur than the Crewe to Manchester spur.

Two Cabinet ministers have suggested the £56B project should be cancelled entirely, whilst a third said the Birmingham to Leeds leg should be scrapped, the Sunday Telegraph reported. Behind their concerns are fears that costs will escalate to £100B.

Speaking at a rail industry event, Transport Secretary Grayling appeared to endorse the risks to the Birmingham-Leeds line.

“It will be a fantastic railway, one of the best in Europe but it still needs support if it is to definitely go to Leeds and connect to the Northern Powerhouse Rail," New Civil Engineer reported him saying.

Grayling went on to say the Birmingham-Leeds line was "not in the bag."

So why does this far-away problem matter for Birmingham's HS2 link to London? This is where it gets scary.

2: If the Northern Spur Goes, Then The Business Case Collapses

This is shaping up to be the most serious threat to Birmingham's HS2 hope, because it is not just long-term HS2 skeptics who worry that the business case is not made.

HS2 Chairman Sir Terry Morgan told the Railway Industry Association annual conference last week that without the Northern Spur, the HS2 project was in serious peril.

“The truth is, that without the northern section of HS2 there isn’t a business case for the line at all. You wouldn’t do HS2 on the basis of Phase 1 [London to Birmingham] on its own. HS2 definitely needs Phase 2, otherwise it does not work,” New Civil Engineer reported him saying.

The logic is clear: if point 1 is true, then point 2 follows.

The Department of Transport responded to reports of the conference by saying any threat to the HS2 line to Birmingham was "absolute nonsense" and that Grayling's and Morgan's comments were taken out of the context of appeals to local business leaders to campaign for the HS2 lines in the way that London business campaigned for Crossrail.

Some in Birmingham's property market have already come to their own conclusions. Speaking at the Bisnow event in Septembrer, Court Collaboration founder Anthony McCourt said: “Let’s be clear, the HS2 scheme is in jeopardy, and I would not assume it can’t be canned just because they’ve passed an Act of Parliament." But he insisted that the city would survive the shock.