Despite Brexit uncertainty, investment in the housing, industrial and office sectors, means there’s still much to be upbeat about in Birmingham said property experts JLL at its annual Midlands Predictions event.
2018 saw investors from London, Manchester and the SE entering the Birmingham market chasing capital and rental growth from a buoyant city living market, driven by population growth, the economic drivers that HS2 brings and demand currently outstripping supply.
Simon Horan, JLL’s residential director said: “HS2 in particular has brought focus and commitment to large scale projects from both the private and public sector. And Lendlease’s appointment on Smithfield and the Commonwealth Games Village, would act as a catalyst for smaller adjoining regeneration schemes.”
With 75% of the population living in the city under 34 years old, Simon said there were more single sharers, moving towards a London ethos of renting a room within a flat rather than an entire apartment.
“In 2019 the focus will be on affordability,” said Simon “And making sure the product is right for a changing market. Build to Rent schemes such as MCR’s development at Monaco House, Exchange Square purchased by La Salle investment Management and Moda Living Tower will also continue to grow.”
The rise of e-commerce too will have a positive impact on the region, as Birmingham and the West Midlands sits at heart of the road and rail network and offers the UK’s second largest conurbation, creating demand for urban logistics sites.
Carl Durrant, industrial & logistics director at JLL said: “Approximately 30% of Grade A industrial space take up had been for internet related logistics. Urban logistics is increasingly important for both on-line retailers and logistic operators taking up space close to Birmingham and other major conurbations in the region to ensure they can compete for same and next day delivery.
“Zooplus has taken 200,000 sq ft in Coventry, World of Books approximately 100,000 sq ft in Coventry and DPD are building a super hub, one of the largest parcel hubs in Europe at IM Properties Hinckley Park, capable of delivering 71,000 parcels per hour.
“Amazon too continue to be a driving force in this market and they are looking for more space to service the city and I think we will see an announcement in a new building made later this year. “
Jonathan Carmalt, office agency director for JLL stated he expected office take up levels in 2019 to exceed the longer-term averages (5 year – 827,170 sq ft, 10 year – 730,002 sq ft) and stated a record prime headline of rent of £35.00 psf would be achieved for the central Birmingham office market in 2019, driven by new build schemes such as Three Snowhill.
Birmingham’s growing number of start-ups and entrepreneurs would also prompt a rise in flexible space, in line with predicted growth across Europe of up to 30 per cent, per year over the next five years.
“We will see the emergence of new ‘hybrid’ commercial space” said Carmalt, “offering a mix of the traditional combined with more flexible space.
“What we have come to think of as the office is being redefined, driven by cloud computing, VPN’s and superfast broadband and the arrival of 5G in Birmingham, will put the city in even more of a position to embrace shifts in workplace dynamics and create more flexible space both in lease terms and usage.”