Birmingham breaks record as residential developments hit new heights

Deloitte’s latest Birmingham Crane Survey has revealed that 2022 was a great year for the city as construction activity continued to set new records and developer confidence remained upbeat.

As the city entered a ‘golden decade’ of opportunity following the success of the Commonwealth Games, it also witnessed the city break its own record for the number of new residential homes delivered onto the market, 2,398 compared to the previous record of 2,072 set in 2020.

Following a dip in office space under construction in 2021, the office market bounced back in 2022, seeing a 40% increase in sq ft under construction.

866,969 sq ft is currently in development, up from just 616,661 sq ft in 2021, but still down from the pre-pandemic levels of one million sq ft.

Now in its 21st year, the latest Birmingham Crane Survey is part of Deloitte’s Regional Crane Survey series, which monitors construction activity within four UK cities, across a range of sectors including office, residential, hotels, retail, education and student accommodation. Across all surveys, 74 new construction starts were recorded in 2022 with residential developments taking the lion’s share of new starts at 37.

Providing a snapshot of developer activity, this year’s Birmingham Crane Survey shows that whilst the number of projects which broke ground during 2022 remained on a par with 2021 with 18 new starts, on-going activity grew by over a quarter with 43 schemes currently in development compared to the 34 previously recorded.

The 18 new starts in this survey are split across four sectors: 13 in residential, two in office and one each for student accommodation, education and hotels. There were no new developments within the leisure sector and for the fourth consecutive year, no standalone retail schemes were started.

“2022 was a phenomenal year for the city. Not only did it seamlessly deliver the Commonwealth Games to a global audience, it also showcased the very best of the city and what it has to offer, which is reflected in this year’s report,” says Juliet Halfhead, practice senior partner, Deloitte Midlands.

“It is time to be bold and bullish about the future. Development confidence is a key indicator for economic health and despite current headwinds and market uncertainties over the last few years, construction in the city has remained resilient

“Although new schemes breaking ground in 2022 remained on a par with 2021, the levels of under construction activity is up a third, signalling three years of growth.

“This positive outlook is echoed across both the residential and office market. Our latest survey reports a record-breaking year for the residential sector, delivering 2,398 homes compared to the previous record set in 2020.

“Couple this with a forty per cent uptick in office floorspace under construction and the future of city centre development remains positive.”

Scaling Up
With premium space in the city centre becoming scarcer, and a sustained demand for large, well-located schemes remaining strong, residential schemes are on the rise, not only in the number of developments breaking ground, but also in terms of scale.

Birmingham’s ever-changing skyline is reaching new heights as the demand for city living continues to thrive. City Development’s new 49-storey Octagon build takes over as the highest building currently under construction in Birmingham, surpassing Moda Livings’, The Mercian which stands at 42-storeys high.

Once complete, the Octagon will deliver 370 new homes and will be the world’s tallest, purely octagonal, skyscraper.

As with previous surveys, there was a real spread of residential activity across the city. The Jewellery Quarter led the way with 13 developments under construction followed by Digbeth, Southside and Westside, all of which have a good number of schemes underway.

The largest residential scheme to break ground in 2022 was Eastside’s Glasswork Locks development, which is set to deliver 769 homes when complete. Maker’s Yard is the second largest, with 551 build-to-rent homes.
Office gains pace
Whilst it has been an exceptional year for the residential sector, office developments also continued to gain pace.

Following a significant fall in floorspace being developed in 2021, the market has bounced back with a 40% increase during 2022 – rising to 866,969 sq ft. For the third consecutive year, two new office schemes started in 2022 – taking the total number of schemes under construction to five.

Three Chamberlain Square, part of the Paradise Circus development, is the first targeted net zero carbon development within the Paradise Masterplan and will provide 185,000 sq ft of office space over 10-storeys when complete.

The refurbishment at Citadel Chambers on Corporation Street is the second office development to break ground in 2022. It will deliver 46,000 sq ft of refurbished floorspace when it is completed in 2024.

Halfhead added: “Both the residential and office markets have dominated development activity within the city over the past few years and this is set to continue. Whilst opportunities for new build and office regeneration projects are becoming rarer, the pipeline looks steady.

“Developers and investors continue to compete for key, strategic sites as demand for Grade A office space continues at pace with occupiers looking for flexible office space to accommodate hybrid working patterns.”

It is this demand for flexible office space which has seen the number of lettings grow over the past year with some key deals including Goldman Sachs’ agreement to occupy 110,000 sq ft at One Centenary Way – the largest deal to complete in the city in 2022.

Bold and Bullish
Whilst the residential and office markets remain strong, accounting for 15 of the 18 new schemes, it has been a mixed picture for other sectors, some of which have seen little or no activity.

Construction space within the survey’s boundaries for large educational facilities is scarce, despite University College Birmingham’s new Engineering and Sustainable Construction Centre breaking ground in 2022.

The number of completed purpose-built student accommodation (PBSA) bed spaces in Birmingham rose slightly in 2022, increasing from 399 to 412.

One new hotel broke ground in 2022 and for the fourth consecutive year, there are no new retail schemes or any in the pipeline as developers continue to focus on mixed-use schemes which include retail units at ground floor.

Halfhead added: “2022 was a standout year for Birmingham on many levels. The Commonwealth Games presented a once in a lifetime opportunity and kick-started a golden decade of opportunity for the city.

“Economic headwinds are likely to feature heavily in any developer’s risk profile for the coming year, but the emerging trends in 2022 are likely to continue into 2023 and beyond, bolstered by the success of the Games.

“The improved connectivity of the city with the wider region will also reap benefits. Birmingham is geographically well-placed and there will be a continued focus on improving the city’s inter connectivity with its suburbs and neighbours, which is evident in the ongoing investment into the metro system and HS2.

“However, it is not just about city centre development activity. There is a wealth of construction activity across every sector which fall outside of the crane survey’s boundaries.

“For the whole region to prosper, construction activity in Birmingham also needs to be reflected in the surrounding areas. The move towards a carbon-zero economy in Birmingham by 2030 and across the West Midlands by 2041, will see an uplift in office refurbishments, carbon-zero housing as well as increased connectivity via green transport.

“2022 was the year all eyes were on the West Midlands. Now it’s the time for the region to be bold, bullish and deliver a legacy that will see the region prosper for many years to come,” added Halfhead.

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