vic regeneration: £500m is being spent on the Paradise scheme
Birmingham
has finally broken its “concrete collar”. The inner ring road that
sliced between office blocks in the 1960s is being rerouted and old
street patterns relaid as part of a multibillion pound redesign of
Britain’s second-largest city.
Vast areas that were transformed by the concrete brutalism of the 1960s and 1970s are being changed again.“The road acted as a barrier that restricted the city centre,” says Ian Stringer, regional director of Bilfinger GVA property consultants. “Now, it can grow again and that has a ripple effect throughout the city.”
Paradise
is a £500m scheme that will demolish the 1970s library, a famous
concrete inverted ziggurat, incorporating a shopping centre, and replace
both with buildings ranged round the city’s great civic space,
Chamberlain Square.
This will see by early 2018 two new grade ‘A’ office buildings, both
likely to be seven floors and with 170,000 square feet of space.
First-stage planning permission was granted on September 18. It is a joint venture between the city council and Hermes Real Estate, part of the BT pension fund.
A pedestrian walkway will lead to the conference quarter and Arena Central, HSBC Bank’s new UK retail headquarters.
It is another £500m scheme with more than 1m sq ft of space featuring
an urban meadow and fountains in front of the award winning £180m new
library. The first phase opens in 2018.
Jonathan Wallis, of Miller Developments, which is involved with Arena
Central, says HSBC has historic roots in the city and was won over by
the welcome the city offered, as well as its growing young workforce.
“Occupiers tell us the way they have been met and treated by the council
has been excellent.”Yet property consultants expect a squeeze within a couple of years, because of the growing number of businesses in the city. More than 1m sq ft has been taken up in the past 12 months. The city has 18.5m sq ft in total, according to Bilfinger GVA. It expects a “tipping point” next year that will drive up rents. For the four years up to 2014, prime headline rental values had remained at about £27.50 a sq ft but have now reached £30 a sq ft. It peaked at £33 per sq ft in 2008 and will hit that level again within a year.
The surge of development follows a long hiatus. In the late 1990s, the city council built the International Conference Centre and Symphony Hall. Then followed Brindley Place, a canalside development of offices and restaurants, and mixed use schemes such as the Mailbox, until the recession hit in 2009.
The latest wave was again helped by the council. It borrowed £83m
against the future uplift in business rates to allow the traffic and
other public works. Chris Taylor, head of private markets at Hermes,
says that without initial site preparation, the Paradise scheme would
not have happened.
But it was the arrival of HSBC and Deutsche Bank, which now has 1,500
staff, and the future move by HS2, the high speed rail company — which
is taking 99,000 sq ft — that were crucial.“Those big three gave the feeling that Birmingham had turned the corner,” says Mr Stringer. “It also created a demand that local occupiers moving in could not. That encouraged developers to put spades in the ground.”
The arrival of the HS2 line to Curzon Street in 2026, with a new station, has also created a vast potential office and retail area near the Bullring shopping centre.
The scheme aims to create 36,000 jobs, 600,000 sq ft of employment floor space and 4,000 homes supported by £600m of local infrastructure investment. Ben Kelly, Jones Lang LaSalle’s director of capital markets, says: “To investors, infrastructure investment flags up an opportunity for capital growth. Combined with prime Birmingham yields being some 75-100 basis points below yields at the top of the market in 2007, it offers a sign that their assets will move in the right direction.”
Legal & General has spent £300m on property in the city in the past six months. Bill Hughes, head of real assets for the pension provider, says the £500m total investment was its largest outside London.
“We have bought into the renaissance of Birmingham. There is an excellent skillset coming out of the universities and, critically, local government is showing signs of being more progressive and engaged.”
Thousands of apartments are being built, some converted from offices, as younger workers choose to live centrally. The council has also earmarked 70 hectares of greenbelt land for 80,000 family homes by 2030, subject to public approval.
Elsewhere the former Rover car plant at Longbridge
in the south of the city is also being transformed. St Modwen, the
listed property business based in Longbridge is investing £1bn in
creating an entire community from houses to offices. A new town centre
is anchored by a 150,000 sq ft Marks and Spencer.
And the Longbridge business park is almost ready for occupiers. It is the largest manufacturing site in the Midlands, covering 43 acres and can accommodate up to 1m sq ft of manufacturing space at a time when it is in short supply.
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