‘It’s Birmingham’s time to shine’ says Deloitte

As Birmingham continues to grow at pace, the city centre has seen significant growth in new construction activity in the residential and office sectors according to Deloitte’s Birmingham Crane Survey.

The survey reports on construction activity across a range of sectors including offices, residential, hotels, retail, education and student accommodation.

For Birmingham, 18 projects broke ground in 2021 in comparison to 10 in 2020, with 34 schemes currently still in development. The 18 new starts recovered are split across four sectors; 14 in residential, two in office and one each for student housing and hotels. There were no new developments within the education or leisure sectors and for the third year running, no standalone retail schemes were started.

Deloitte says the uptake has followed a ‘subdued 2020’ but the report has also looked at developments beyond the survey search area which have added to the higher levels of activity.

Edwin Bray, a partner in Real Assets Advisory at Deloitte and author of this year’s survey said: “Major developments linked to the Commonwealth Games sit outside of the survey’s boundaries, which is where we are seeing higher levels of activity across all sectors. Once the Games have taken place, we should see additional activity with some projects set to be repurposed, bringing new leisure, hotel and mixed-use schemes.”

Whilst the residential sector had the highest levels of activity in Birmingham in 2021, it did not surpass the 2,072 units completed in 2020, as the volume fell by 26% to 1,520 units.

Bray added: “The ongoing pandemic coupled with supply issues, restricted availability of materials and labour shortages have all contributed to delays in the completion of some residential schemes. However, the sector could return to record-breaking levels in 2022 as delayed projects complete.

“Demand for build-to-rent schemes and the private rental sector remain strong and developers have responded to the need for a mix of high-value apartments alongside more affordable and family housing. Developments on Great Charles Street, Broad Street and Southside will significantly increase the number of build-to-rent units in the city over the coming months.”

More than 750,000 sq ft of office space was delivered in 2021 over four schemes including 3 Arena Central and 103 Colmore Row but

However, following five consecutive years of floor space being developed exceeding one million sq ft, pipeline activity has almost halved, with just over 600,000 sq ft under construction, below the annual average of 765,810 sq ft.

Bray said: “Opportunities for new build and office regeneration projects are becoming rare which is reflected in the pipeline; however, office development is strong across other areas of the city.

“Demand for Grade A office space continues its upward trajectory with investors and developers continuing to compete for key, strategic sites. However, this is a crucial time for developers as the demand for more flexible office space to accommodate hybrid working patterns and fluctuating space requirements continues to increase.”

Four schemes are currently being developed including two new starts – Enterprise Wharf in the Gun Quarter and the remodelling of 10 Brindleyplace.

The largest deal to complete is Arup’s agreement to occupy 68,479 sq ft of space at One Centenary Square. Goldman Sachs has opened its regional hub on Colmore Row and it’s reportedly looking for a more permanent space and aiming to double it to around 100,000 sq ft.

Outside of the residential and office sectors, there has been little to no activity with just 399-beds of student accommodation built in 2021 in comparison to 1,458 the previous year.

Only two schemes are currently under construction, with no new developments on the horizon within the Crane Survey’s research area, although the activity is taking place further afield. Only one hotel was completed delivered 195-beds with another just breaking ground.

Bray said that: “Issues around viability and sustainability will continue to make new, standalone retail developments hard to stack. The shift pre-pandemic towards repurposing secondary retail property rather than adding to supply will remain.

He concluded that “2022 will be a standout year for Birmingham on many levels. Construction activity across the whole of Birmingham will continue and the Commonwealth Games will bring much-needed tourism and a boost to the hospitality sector.

“The Commonwealth Games presents a once in a lifetime opportunity and couple this with the prospect of HS2, the extension of the tram network and infrastructure changes which form part of the region’s levelling-up agenda, we can definitely say it is Birmingham’s time to shine.”