Birmingham Crane Survey 'Office development at highest level for 13 years'

Cranes dominate Birmingham skyline as city on development high

• Office development at highest level for 13 years
• Nearly 1m sq ft of office space under construction
• 693 new hotel rooms being built in Birmingham

Birmingham’s development upturn looks set to continue this year, as the latest Deloitte Birmingham Crane Survey shows office construction at the highest level for 13 years. The report also showcases the significant increase in hotel, leisure and retail developments in the city, reflecting both the rise in investor interest in regional cities and the year-on-year growth of visitor numbers attracted to the UK’s second cityⁱ.

The report, first launched by the Deloitte Real Estate team in the Midlands in 2000, shows 969,000 sq ft of office space under construction, with hotel construction three times higher than the 10 year average. In addition, student accommodation development in the city centre has returned after two years of inactivity.

Edwin Bray, lead partner of Deloitte Real Estate in the Midlands, commented: “This is an incredibly positive report in many ways, and reflects the sentiment towards Birmingham and the wider Midlands region that we are seeing across our firm and client-base, not just here in the UK, but globally. The Midlands ‘engine’ is roaring loud and clear, and the year-on-year improvements and investments, such as the £600m refurbishment of New Street Station, the Grand Central Shopping Centre and the new Midlands Metro, just continue to strengthen the city’s offer.”

Office take-up has shown a resurgence. Q1 to Q3 of 2015 reached 732,000 sq ft, its highest level since 2008. The Colmore Row district remains very attractive to investors, whilst more peripheral locations have become more established and are generating serious interest.

Bray continued: “Increase in capital values coupled with genuine rental growth has been a feature of the last 12 months and yet, our market continues to offer excellent opportunities and great value for investors prepared to consider an alternative to London.”

The areas that have seen a decrease in the latest Deloitte report are construction of new education facilities (one recorded), residential completions (none recorded) and the overall number of new schemes (nine) which fell below the average (11). There are however a number of schemes in the residential sector that are nearing construction start (the Deloitte Crane Survey only counts projects in construction, not demolition) and at the time of the report’s publication Birmingham City Council has sighted 12 development sites across the city centre which have been scoped for residential development.

“If you put this in context, and consider where Birmingham was at the point of our last survey in 2013, seeing a 10-year low in new schemes, the overall message is still that Birmingham’s outlook – short and mid-term - is positive,” concluded Bray.

Pauline Biddle, practice senior partner for Deloitte in the Midlands, added: “This latest Deloitte Crane Survey shows that the bridge between London and the regions in the recent economic downturn appears to have strengthened, with confidence in Birmingham and other regional centres improving year-on-year. This has been reinforced by the commitments from some of the world’s biggest brands to relocate and expand their Birmingham operations and the Chancellor’s latest announcement of a £1.1bn devolution package.”

Neil Rami, chief executive of inward investment agency Marketing Birmingham, commented: “Birmingham’s popularity as a business and leisure destination continues to rise, with the city attracting record numbers of businesses and visitors. This is having a direct impact on our local property and construction sector, which is investing significantly across the city to meet this demand. It is critical for Birmingham's economic performance that its new developments are tailored to the city's specific requirements. The creation of much-needed high quality office space for new investors, and a variety of new residential schemes to house the talented staff and students locating here, will be particularly welcome.”

End

Notes for editors

ⁱ Birmingham’s visitor economy to hit all time high in 2015 (Source: Marketing Birmingham)
http://visitbirmingham.com/media-centre/press-releases/birminghams-visitor-economy-to-hit-alltime-high-in-2015/

About the Deloitte Crane Survey
This report measures the volume of development taking place across central Birmingham and its impact. Property types include office, retail, leisure, residential, student accommodation, education and hotels. The report focuses on Birmingham, covering the central office markets: city core, city centre, Digbeth, Jewellery Quarter and Edgbaston and includes insight from developers building new schemes or undertaking significant refurbishment of the following:

Size minimum:
Office -10,000 sq ft,
Retail – 10,000 sq ft,
Residential – 25 units,
Education, leisure and hotel schemes – significant scheme for inclusion.

The report is carried out by Deloitte’s in-house real estate team in Birmingham who have monitored office construction across the city. Deloitte’s field research is then verified with direct industry links and in-house property experts.

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.