Council considers Corporation Street disposals to fund Snow Hill Masterplan

A COLLECTION of city centre office buildings are set to be marketed by Birmingham City Council in an attempt to generate funds towards the delivery of the £600m Snow Hill Masterplan.

The masterplan aims to redevelop the Snow Hill and Colmore areas into Birmingham’s answer to Canary Wharf.

The scheme also involves the redevelopment of Snow Hill station and the opening up of routes towards the Jewellery Quarter and the Gun Quarter.

Birmingham has ambitions to become a global professional services hub and the masterplan forms part of a 20-year vision for the central business area.

It has been suggested the transformation of the area could create 10,000 new jobs.

However, the scheme won’t come cheap and in order to raise funds, the cash-strapped authority is having to be creative with the resources it has at its disposal; one of which is to look at utilising redundant facilities elsewhere in the city.

Earlier this year, the council authorised the Director of Property (DoP) to investigate ways of using the existing property assets to lever investment.

The focus has fallen on certain assets along Corporation Street, which include Steelhouse Lane police station, which is due to be vacated early next year.

As such, the council is looking to collaborate with the West Midlands Police and Crime Commissioner.

The council’s cabinet meets today (Tuesday) and is expected to authorise the DoP to negotiate -in conjunction with the WMPCC – for the disposal of assets at Corporation Street/Steelhouse Lane, including the police station, which will contribute to the Snow Hill Masterplan.

The DoP will also be authorised to market the Pitman Building and Murdoch Chambers, also on Corporation Street, for disposal on a long-term leasehold basis.

The council said the sale of the buildings would contribute to the Commercial Investment Property Portfolio, which generates more than £30m of external income to the authority.

The council will also set aside £50,000 for technical reports that will attract wider interest in the properties; a proportion of the money will come from WMPCC budgets.

The Chamberlain Buildings, at the northern end of Corporation Street, form part of the Victorian and Edwardian townscape dominated by the city’s law courts.

The Steelhouse Lane area, which will be known as St Marys Place under the marketing scheme, has been identified for reconfiguration which will unlock sites and provide an opportunity for investment as part of the Snow Hill Masterplan.

The council’s strategy is to see the refurbishment of the buildings by specialist developers which in turn will help create a new neighbourhood whilst protecting the historic street scene.

The Chamberlain Building (CCCB) portfolio comprises ten multi–storey Victorian, largely terracotta, buildings located along the length of Corporation Street. The total lettable area is circa 300,000 sq ft.

The council said the portfolio presents “an important collection of assets within the wider Commercial Investment Property portfolio” given its role largely providing affordable office space for small businesses and shops for independent traders.

The buildings also make a significant architectural and historical contribution to the city centre environment; six of the assets are listed.

The buildings have been targeted for disposal because the demand for their office space has declined, although the retail provision is still performing well and is fully let.

“Overall the CCCB portfolio is underperforming as a net income generator due to high office vacancy rates, inefficient office floor plates, and an oversupply of tertiary office space,” states a report to cabinet.

This position is expected to worsen and doing nothing about will only commercial viability of the properties.

“The current use as offices is no longer sustainable and in order to preserve the individual buildings and historic environment alternative uses need to be considered. The upper floors are most likely to attract residential or student accommodation conversions which will provide additional housing units and so expand the residential footprint in the city,” adds the report.

“Conversion of the upper floors and increased footfall will give further opportunities for investment.”

A review of the Chamberlain Buildings portfolio was instigated last year which resulted in two projects being identified which can support the Snow Hill Masterplan.

The first project offers an opportunity to work with the WMPCC on a joint disposal.

The block comprises three BCC owned buildings: Coleridge and Ruskin Chambers, which are both Grade II Listed, and King Edward Building and Steelhouse Lane police station, which will be vacated in February next year.

There is the potential to enter into a collaboration agreement to dispose of the block in its entirety in order to maximise development potential.

“Working collaboratively with WMPCC will provide an enhanced opportunity for both publically funded bodies to reduce running costs, create economic growth and bring investment to the city as well as provide regeneration, and the potential for new housing and jobs,” states the report.

The three BCC owned buildings have a combined floor area of 68,250 sq ft, set on a footprint of 0.46 acres, the combined site extending to an acre.

A disposal would be structured to retain the income stream from the retail units.

Soft market testing has suggested the best use for the upper floors would either be residential or student accommodation.

However, former council leader Sir Albert Bore has said too much property in that area is designated for student accommodation and a mix of residential, leisure and employment uses would offer more to the city in the longer term.

The report adds that while King Edwards building is fully let and performing well, soft market testing has highlighted a preference for inclusion of the buildings as part of any redevelopment, given the potential of the wider site to enhance interest with developers.

Existing tenants would be offered relocation to other council-owned facilities elsewhere in the city centre.

The second project is the Pitman Building and Murdoch Chambers, which are Grade II Listed. The four-storey building has a combined floor area of 27,324 sq ft set on a footprint of 0.32 acres.

Again, market testing has indicated the strongest interest is likely to come from the residential and student accommodation markets.

The council is proposing to appoint consultants, who will look to market the facilities in accordance with the council’s Procurement Governance arrangements.

The Pitman/Murdoch block will be presented to the market first followed by the larger joint disposal opportunity. Part of the commission will be to develop a strategy for relocating, where possible, existing office tenants elsewhere within the council’s portfolio.

Due to the heritage value of the assets and the importance of this project to the Snow Hill Masterplan, the council said a targeted bespoke approach to marketing would be required to ensure developers with an appropriate track record and access to investment capital were identified.

Expressions of interest will be sought and a shortlist of suitable development partners drawn up. The DoP will then select a preferred partner for each project and report back to cabinet for further approval.

A further report will be presented once marketing and shortlisting has been undertaken, and the preferred partner identified.
 

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