Birmingham's Big Win From The £360M Bruntwood/L&G Tie-Up
The £360M tie-up between Bruntwood and Legal & General will put rocket fuel into plans for a new Birmingham Science Quarter.
Bruntwood's science parks boss Tom Renn talked exclusively about their Birmingham plans ahead of Bisnow's Birmingham State of the Office Market event on 6 December.
Bruntwood and Legal & General Capital announced late last week that they had established a 50:50 partnership, Bruntwood SciTech, to drive science and technology growth in regional cities.
The £360M partnership is expected to grow the businesses' science property portfolio across the English regions from 1.3M SF today to 6.2M SF by 2028. The portfolio is heading for a valuation of £1.8B.
Amidst the fanfare, the implications for Birmingham got drowned out. Yet the city is central to Bruntwood's growth plans. With the Manchester-based business' scope for growth strictly limited in its home city, the focus will inevitably turn to a market the firm believes is under-explored: Birmingham.
The deal will build on Bruntwood's acquisition earlier this year of the 80K SF Birmingham Innovation Campus, a move which was already expected to lead to a further 90K SF development.
The leadership team there includes Thomas Renn, managing director of Manchester Science Partnerships and Bruntwood's chief strategist for the growth of its science portfolio, alongside Innovation Birmingham Managing Director David Hardman.
According to Renn, the deal with Legal & General offers a chance to accelerate plans for a powerful Birmingham science partnership which could transform the city's real estate offer. The Birmingham Innovation Park acquisition in March was always understood as the first step to assembling a broader science portfolio in Birmingham, Bruntwood told Bisnow in March.
The joint venture with Legal & General puts extra fuel in the tank of talks that are already underway between Bruntwood, the city council, universities and hospitals over expanding science property provision.
“Science is pivotal to our strategic vision in Birmingham," Renn said. "We see latent potential not least because nobody else is doing it.
“We are now looking into collaboration with the universities and the public sector. There’s an opportunity to do something of real scale, building on the 80K SF Innovation Birmingham campus.
“Opportunities are still emerging, but what’s clear is we have the appetite to acquire existing assets where they exist, and to reposition them for today’s markets, and we’d look at new build. I would like to think we could treble the size of the Innovation Birmingham campus in a three- [to] five-year horizon.”
Renn said talks with other partners about plans for a larger Birmingham science quarter are now in progress. First comes an alignment of aims, then comes the search for sites.
“Conversations are going in the right direction,” Renn said. "We’re very excited to be working with academic, clinical and civic partners to grab the opportunities. But we need to find the right vehicle which might be strategic partnerships, and as a step towards this David Hardman has already convened the first advisory board for Birmingham Innovation, which is an effort to anchor the right energy in the city.
“Possibly this will be about joint venture structures, but it is also about finding the development opportunity, which will need a development vehicle. The question is how we find that opportunity. Today it's coming together through the advisory board, and when the land presents itself I expect we’ll come closer together in some format.”
Renn points to the example of the co-operative arrangement between the Central Manchester Hospitals and Bruntwood which is delivering Manchester’s Citylabs. He suggests similar defined-purpose vehicles might be the answer.
The Bruntwood/L&G deal represents the largest investment made in science and technology property assets in Europe this year.
The new company combines Bruntwood’s commitment to creating thriving cities, working in partnership with public, private and academic institutions, and Legal & General’s ability to unlock urban renewal opportunities and accelerate growth of some of the U.K.’s key sectors through its long-term capital.
With Legal & General’s long-term financial support, Bruntwood SciTech will initially focus on developing out its existing portfolio of assets as well as expanding within the Northern Powerhouse and Midlands Engine regions. In the medium and longer term the business will explore opportunities for investment in other U.K. regional cities.
“Although the U.K. is a great place to do business, years of chronic underinvestment have led to poor productivity, inadequate real wage growth and muted economic growth," Legal & General Chief Executive Nigel Wilson said. "Science and technology will be key to revitalising the U.K. economy and driving job creation. We need to keep investing to support the development of our U.K. regional cities."
Graham Barnes and Colin Thomasson of CBRE advised Bruntwood, alongside a team from Addleshaw Goddard. Savills, EY and CMS represented Legal & General.
