Midlands

Property News Index

Read about the latest news, views and developments in the commercial property world from our industry expert.

Revving UP
Ice on THE CAKE
Boosting SALES
InBrief #1
SETTING records
More MANUFACTURING PLEASE
ORCHARD GETS THE Cornerhouse
HSBC buys
Skanska ADVANCES
A NEW Walsall?
Gateway TO SUCCESS
InBrief #2
CDM BOSS

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Midlands Commercial Property News - Friday, November 3, 2017

Issue #76

Revving UP

Midlands News

It is interesting how the arrival of a catchphrase for a city or a region can act as a catalyst for change, in this case the widening use of the Midlands Engine promotional phrase.

For a number of years the region has seen a steady increase in confidence, it may be that this coincided as Manchester was first promoted as the centre of the Northern Powerhouse.

Whichever way you look at it, the Midlands fulfils many of the precepts of a dynamic economic growth region to which has now been added a new impetus from Birmingham City Council.

A clear example of this is that the council has appointed Original Group to produce a feasibility study for Birmingham to be the host for the 2026 Commonwealth Games.

Original is part of a consortium of PwC Four Communications and Trivandi.

To this should be added the council’s new 15 year plan for homes and jobs. It plans 51,000 new homes and the infrastructure to go with them.

Another telling aspect of the confidence is that Knight Frank estimates that 90% of the city centre office development is speculative. The agents said that “the city is set on a journey of transformation that is continuing to attract developer and property investor interest."

High quality refurbishments are leading the way, such as IM Properties at 55 Colmore Row.

Jamie Phillips of Knight Frank commented: “Whether it be high quality refurbishment or large scale new build, the city clearly has a schedule of development which is aligned to appeal to indigenous occupiers and footloose inward investors."

This has brought in investment, notably the 30% of the total over the past five years from overseas.

David Tonks of Cushman & Wakefield said: “There is little doubt that the city will maintain a strong national profile as HS2, the mayoral election and the impact of the combined authority in the Midlands become increasingly evident."

Unlike most urban areas in the UK, Birmingham can probably cope with the conversion of older offices into residential use. Hong Kong investors have bought the 4,832 sq.metres (52,000 sq.ft.) Herbert House on Cornwall Street through Cushman & Wakefield and will use ADAPT Real Estates for the mixed use scheme with 77 flats and leisure facilities on the ground floor.

While there is strong demand for residential accommodation in the centre of the city, there is also a good inflow of new office occupiers, such as Maber Architects at Colmore Row.

Ice on THE CAKE

Midlands News

The transformation of the site of the former Silver Blades ice rink in Birmingham’s Smithfield area has moved on with the construction of the £60 million private rented sector (PRS) of 334 units by Rockspring.

The council plans to transform the 14 hectares area, now the Forum, with 300,000 sq.metres (3.22 million sq.ft.) of leisure, retail, hotels and cultural space as well as 2,000 homes and public space. This includes a new indoor retail market with a food hall.

The ambitious project will take 10 years to complete and cost an estimated £500 million.

Councillor Ed Clancy said: “The Forum is a significant development which not only kick starts the development of the Smithfield area, but also delivers new homes to the city."

Paul Hampton of Rockspring said: “The scheme is in linewith our strategic focus on rapidly improving residential sub markets within dynamic cities that are expecting high levels of urbanisation and growth."

Siddall Jones, the independent property consultancy based in Birmingham’s Jewellery Quarter, have started the new year with a flurry of investment deals.

Acting on behalf of Tickety Boo Properties, the company sold Azzurri House in Aldridge for £1.46m to a private investment company. The property is let to Azzurri Communications Limited until March 2020 at £141,572 per annum.

Boosting SALES

Midlands News

The 35,316 sq.metres (380,000 sq.ft.) One Stop Shopping Centre and Retail Park at Perry Barr is being given a marketing boost by Savills and Cushman Wakefield (C&W).

It is three miles from Birmingham City Centre and has blue chip occupiers such as Asda, Marks & Spencer and Nike. It has been recently bought for £70 million by Europa Capital and Sovereign Centros.

Adam Lazenbury of Cushman & Wakefield said: “We plan to deliver a shopping experience which meets the changing needs and requirements of the centre’s catchment area. Significant changes are planned in the area."

C&W, together with KWB, has also been active in promoting the Kings Norton Business Centre bringing the total space let in the last year to 42%.

There is only a small amount of space now empty.

InBrief #1

Midlands News

Through Siddall Jones, 56-60 Newhall Street was sold to an overseas investor for £1.9m. The property which comprises thirteen one bed flats and a ground floor coffee shop produces £103,000 per annum.

SETTING records

Midlands News

Apart fromthe region’s significant manufacturing capacity, the West Midlands is a key location for the fast expanding logistics industry.

According to JLL, last year it saw the second highest annual take up of logistics space in the past 10 years but new space is setting an absolute record. Total logistics space let was 2.14 million sq.metres (23.9 million sq.ft.), up 38% on 2015.

JLL’s Richard Evans said: “The retail sector provided the most active source of demand last year and accounted for 58% of the Grade A space. Demand remains high for large buildings, indicating another strong year."

Cushman & Wakefield noted the buoyancy of the West Midlands market for new space and the letting of 557,400 sq.metres (6 million sq.ft.) in the first nine months of 2016 led by Jaguar Land Rover (JLR), the automobile sector has been the most active leaser of new space.

Simon Lloyd of C&W said: “The UK is at the forefront of the growth in e-commerce which is accounting for an ever increasing amount of sales.” An example of such deals was the letting of space at M&G’s Birmingham Gateway to WE Deane, a freight forwarder, capping a strong recent performance there. The deal was handled by C&W and Savills.

Of course, the response among developers has been to build new space, such as Barwood and First Industrial at Walsall Road, just north of Birmingham city centre. This is a 9,297 sq.metres (100,075 sq.ft.) warehouse named Birmingham 100.

Barwood’s Edward Henson said: “There is very little supply of newly constructed warehouses, strong demand for such space and a large workforce catchment."

One of the largest players in the industrial market, Tritax Big Box REIT, has been particularly active.

Typical of its deals is the funding of two warehouses totalling close to 92,900 sq.metres (1 million sq.ft.) at Warth Park, Raunds and pre let to Howdens. The developer will be Roxhill.

AT Prologis Park, Fradley, Staffordshire, Tritax has forward funded 52,211 sq.metres (562,000 sq.ft.) which is pre let to Screwfix and developed by Winvic Construction. The other major Tritax deals in the Midlands saw it pay £115.5 million for two industrial facilities, one at Birch Coppice and let to Euro Car Parts and the other, at Warth Park, let to Whirlpool.

More MANUFACTURING PLEASE

Midlands News

A new4,645 sq.metres (50,000 sq.ft.)manufacturing facility at Hollymoor Point, Rubery, has been completed by Hortons’ Estate Developments and Trebor Developments.

The facility has been developed on behalf of Aquapak Polymers, a UK-based sustainable plastics manufacturer. Up to 50 direct jobs and 25 indirect jobs are expected to be created during the first three to four years as the company scales up production.

Bob Tattrie, managing partner at Trebor Developments, said: “It is great to see this building completed on time.

With the other phased developments that have been undertaken at Hollymoor Point, the overall development site has now created an extremely successful industrial park.”

ORCHARD GETS THE Cornerhouse

Midlands News

Nottingham has also been a more buoyant market in the past few years with a flow of investment deals.

One of the largest of these is Orchard Street paying Land Securities £65 million for the 20,903 sq.metres (225,000 sq.ft.) The Cornerhouse leisure scheme.

The facility has a variety of bars and restaurants together with a casino and a night club within walking distance of the universities and city centre. Barney Rowe of Orchard Street said: “The Cornerhouse is a strong leisure asset with an impressive line up of tenants located in the city centre that is underpinned by strong demographic trends such as urbanisation and a flourishing university population.”

HSBC buys

Midlands News

Although HSBC is considering moving 1,000 employees out of London to Europe because of Brexit, it is still seeking space in Birmingham for a similar number of people.

Ahead of this deal, its investment arm (HSBC Alternative Investments), is negotiating to buy the five buildings in Brindleyplace for £260 million from Lone Star and Hines Global REIT. If the deal goes through it would be a major boost for Birmingham ahead of the arrival of HS2.

This should be viewed against the background of a resilient Midlands commercial property market with the RICS survey showing demand increasing, led by industrial property and the arrival of increased foreign investment on the back of a weaker pound.

Skanska ADVANCES

Midlands News

With the government developing a new industrial policy emphasising technology and new processes, there is a growing network of advance manufacturing centres.

In the Midlands, there is the Manufacturing Technology Centre at Ansty, Coventry where the construction company Skanska has become a member.

The company aims to develop new techniques at the MTC and provide the ability to work in teams with a range of new techniques for its clients.

Mike Putnam of Skanska said: “Our membership of the MTC supports our aim to be a leader in the development of new technology, which can benefit the whole industry. We need to find smarter and more effective ways of working."

Neil Rawlinson of the MTC commented: “This partnership will be a significant game changer not only for the construction industry but also for the MTC as we are poised to launch a high-profile campaign with their construction and infrastructure sectors that will illustrate the range of technologies and the impact they can have."

Knight Frank believes that the advancement in sectors such as manufacturing, financial services and technology will provide a huge fillip for the Birmingham office market. James Roberts cites the re-shorting of manufacturing, robotics, drones, autonomous cars and fintech as components of the change with a digital economy.

There are also the changes in transport systems, notably HS2, particularly its effect on Birmingham Airport.

The Midlands is in good shape to benefit from new technology with its well spread industrial base. That means a vibrant letting market, such as, for example, KWB handling the 2,601 sq.metres (28,000 sq.ft.) sale of an industrial unit to the building supplies firm Kellaway in Trow Way, Diglis, Worcester.

Kellaway has recently bought a local timber and building supplies company, Premier.

Kenny Allan of KWB said: “The availability of good quality, well located warehouse buildings in Worcester is extremely rare."

Developers such as Chancerygate are playing a vital role in providing the new space in the Midlands. It has recently completed three lettings at the Octagon Business Centre and Birmingham Trade Park.

Chancerygate’s David Tyson said: “We have recently seen good demand at both these estates.”

A NEW Walsall?

Midlands News

With its fine art gallery, Walsall has undergone major regeneration in recent years.

Cushman & Wakefield has been given the task of breathing further life into key development sites close by and within the Black Country Enterprise Zone. Councillor Lee Jeavons, Deputy Leader & Portfolio Holder for the Region & Transport. said: “Jobs are of the utmost importance in the borough, which has been hit hard by the decline of traditional industries."

The main area for improvement is Darlaston and Pleck. Within Darlaston is the 44 acres of Phoenix 10, the site of a former IMI refinery which could accommodate around 60,000 sq,metres of industrial space. In fact Walsall is pro active in developing the new infrastructure the old industrial areas need, such as new roads. Jonathan Turner of C&W said: “The delivery of the Enterprise Zone sites will be the catalyst for the further development of the wider area. At present, there is a lack of land for development in the Black County.”

Gateway TO SUCCESS

Midlands News

St Modwen is another developer that has continued to feed the expanding market with new industrial space.

It now has a major scheme for two logistics units of 30,471 sq.metres (328,000 sq.ft.) at the Burton Gateway Business Park, Burton-upon-Trent.

Ian Romano of St Modwen commented: “These latest planning approvals will allow us to continue to meet the shortage of prime quality industrial space and logistics sheds on the A38 serving the Midlands."

St Modwen has already built the roads and infrastructure on the park.

This is part of a wider regeneration project, Branston Lees, by the developer which includes retailing, an 82 acre wood and a school.

InBrief #2

Midlands News

LCP has added castings firm Chamberlin & Hill to its portfolio of tenants after it agreed a 10 year lease for a 21,245 sq.ft. unit in Walsall. The new facility could lead to the creation of 33 local jobs.

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