New starts in 2022 were once again driven by construction activity in the residential and office sectors. Of the 18 new schemes breaking ground in this year’s Birmingham Crane Survey, residential developments led the way with 13, followed by two office, and one each for the hotel, education and research, and student accommodation sectors.
2022 saw 43 schemes under construction compared to 34 in 2021. That’s an increase of almost one third and a sign that investors and developers continue to have confidence in the city and its economic future. Of these 43 schemes there were 33 residential, five office, three hotel and one each for student accommodation and education.
The retail sector continues to be muted with no new major retail scheme breaking ground for the fourth consecutive year. However, on a smaller scale, retail floorspace is being delivered across the city centre as part of active frontages to mixed-use schemes.
While the office sector only saw two new start developments in 2022, there was a significant increase in floorspace under construction taking it to 866,969 sq. ft. Although this represents a 40% increase from 2021, it does not quite approach the levels seen in 2020 of over 1m sq. ft.
Paradise Circus has heavily influenced the office floorspace figures over the last couple of years, with Phase 2 comprising of One Centenary Way still under construction and Three Chamberlain Square recently started.
The office market is undergoing significant change as a result of the COVID-19 pandemic, as developers design (and re-design) schemes to meet the increasing demand for Grade A floorspace, sustainable buildings, and workspaces that are flexible and collaborative.
The UK economy is now officially in recession. The Deloitte Economics Monitor is forecasting a record contraction in UK household disposable incomes per person in this fiscal year (2022-23) and the next (2023-24).
When coupled with high interest rates, high global energy prices and supply side challenges, the economic recession will potentially have the greatest impact on office development. Many organisations are already considering their office and estates strategies. However, it is probable that all sectors will witness some element of slowdown in investment.
While there is only one education and one student accommodation new start recorded in 2022, activity outside of the Crane Survey boundaries is strong as the city continues to attract significant investment and numbers of UK and international students to its leading universities. 412 student beds were delivered in 2022, with a further 472 under construction and more in the pipeline.
There has been one new start in the hotel sector in 2022, adding 155 rooms to the 731 already under construction. The pipeline across all sectors, with the exception of retail and leisure, remains strong with schemes either granted planning but yet to break ground, or going through the planning process.