Bullish Hammerson's Birmingham Office Big-Box Rethink
More than two years after John Lewis closed its Birmingham outlet, landlord Hammerson said it has decided on the department store's future: It will become offices.
The move, which sees Hammerson reject the option of conversion to build-to-rent apartments, follows in the footsteps of several other landlords struggling with empty department stores. It will see the 247K SF store converted into 200K SF of workspace branded as the Drum.
Designed by Ken Shuttleworth’s Make Architects, the proposals reflect Hammerson’s strategy to reinvigorate its prime urban estates through diversifying uses while maximising the reuse of embodied carbon in existing buildings.
The strategy highlights a bullish stance toward offices, just as data suggested Birmingham’s office market is back on its legs after a slow recovery from the coronavirus pandemic.
Office take-up in quarter-four 2022 in the central Birmingham office market totalled 210K SF. This brings the 2022 year-end total to 693K SF, the highest since 2019’s 781K SF, Birmingham Office Market Forum figures showed.
The education and life sciences sectors, which have been growing rapidly in Birmingham, could make ready targets for Hammerson’s marketing efforts at Drum.
Drum will extend the former department store’s atrium through all the four floors of the building to include a sweeping, open, communal entrance that widens as it rises, providing visual connectivity between the floors and drawing daylight right down through the heart of the space, Hammerson said.
It will also lead to a newly created rooftop garden lounge, an important external communal space for occupiers. Green walls on each level will give the appearance of the garden spilling back down through the building.
Hammnerson’s decision to opt for office conversion follows decisions to convert department stores into build-to-rent housing at some of its other shopping centres. An early outing for the BTR idea in Leicester was followed by the recent decision to add BTR units to The Oracle scheme in Reading. But the deep space and lack of natural light in department stores makes conversion expensive.
The REIT has now joined the mainstream of landlords by exploring the office option. The long list of former department stores now on the pathway to office conversion include Birmingham’s former Rackhams department store where workspace features heavily in Legal & General’s 500K SF rethink.
In Manchester both the former 540K SF House of Fraser and former 500K SF Debenhams are slated for office conversions at the hands of Investec and AM Alpha, respectively.
Marks & Spencer’s London Oxford Street flagship is also on the list, as is the nearby John Lewis store where the retailer has been mulling plans to convert 300K SF of the 650K SF store into offices, with a joint venture between Texas-based Hines and Korea’s National Pension Services tipped as the likely developer. Also at Oxford Street, Public Properties Establishment is planning to convert a 145K SF House of Fraser department store at 318 Oxford Street to offices.
Cushman & Wakefield represents Hammerson for office lettings and Bruce Gillingham Pollard represents Hammerson for hospitality and leisure lettings within Drum.
