As Property Prepares For A Birmingham Lockdown, Developers Press On Regardless

Commercial property markets may have reason to fear a local lockdown in Birmingham.

As infection rates in the city rise, and the government considers the next steps, evidence from Manchester suggests a local lockdown does not come without costs for the property industry.

Yet for now, office developers in Birmingham and Coventry are pressing on regardless.

The potential local lockdown has been prompted by rising rates of infection.

In Birmingham, the rate is 31.5 per 100,000 residents, rising from 18.2/100,000. Sandwell is also up slightly (from 22 to 25), with Coventry and Wolverhampton rising slightly from lower bases.

For comparison, Manchester is nearly 50 per 100K residents and the list of areas with rising infections is topped by Oldham (92) and Northampton (123).

Across the West Midlands the infection rate has risen in one week from 13.8 per 100,000 people to 28.1/100,000.

Local public health officials warned that Birmingham could feature in the next national watchlist of locations considered for local lockdowns as infections quickly escalate, Birmingham Live reported.

Birmingham’s council leaders said now is the time to act to prevent a local lockdown.

Agents believe a local lockdown could be damaging for the region’s property market, especially in the hard-hit area of retail/leisure.

“Working from home is having a huge impact on businesses that have traditionally been supported by office workers," FHP Head of Birmingham Doug Tweedie told Bisnow. "Before the pandemic we were seeing significant growth in leisure occupiers around the central business district but a number of businesses have failed since lockdown. 

"Part of the reason is that we don’t have the high proportion of high street shopping environments that other large cities like Glasgow or Manchester do, and they may well fare better in the long run. Birmingham’s retail areas are dominated by large indoor shopping environments which are not favoured by the consumer at the moment and any further restrictions are only likely to exacerbate the problem. There are several large developments under construction in the city but will they pre-let if there are fears of a recurring local lockdown? It would seem unlikely.” 

Evidence from Manchester, where the local lockdown is now two weeks old, shows how it can disrupt the property market.

Local property market reaction has ranged from resigned to a testy unhappiness with the government’s sense of priorities.

“We didn’t panic in March when the national lockdown began. Others panicked, but we didn’t," OBI co-founder Will Lewis told Bisnow. "We kept our cash and planned to get through to 1 September, expecting the final quarter to pick up. But I see now we were totally wrong because the end of the year will be tougher than anything we’ve seen so far. The worst is yet to come.” 

The latest local lockdown is multiplying the problems caused by the national lockdown, Lewis said.

The Manchester lockdown is expected to be partially eased this week.

The threat of local lockdown comes as West Midlands developers begin to return to work in earnest.

Coventry City Council will this week agree a £17M package of support for the speculative Two Friargate office development. The 134K SF building is regarded as an urgent priority as the city charts a path out of coronavirus recession, the Coventry Observer reported.

The 37-acre Friargate site has been slated for development for 10 years but has largely failed to attract private sector interest.

Simultaneously Birmingham’s tallest tower crane arrived to take forward the 280K SF speculative development of One Centenary Way, part of the Hermes Paradise development.

Measuring 440 feet to top of the jib, it will be at work until One Centenary Way completes construction toward the end of 2022.

The block is the first in the second phase of the Paradise scheme.

Construction work on the £1B project resumed in April after a brief lockdown pause.