Regional property boom set to continue – JLL

THIS year will see the rebirth of the regions with the West Midlands seeing its fair share of growth in the commercial property sector.

That was the overarching conclusion from JLL’s Midlands Property Predictions event.

The event in Birmingham on Monday attracted more than 150 professionals from the business community and they were presented with a positive take on the regional property market’s prospects.
 
This interpretation is perhaps unsurprising given Birmingham property investment volumes in 2014 were up 19% at £1.04bn, 86% ahead of the average for the 2008-2013 period.

And investment more than doubled in the West Midlands outside Birmingham, from £798m to £1.66bn.
 
Allan Wilson, JLL’s director of capital markets said: “Investment volumes during last year were higher than at the height of the property boom and look set to continue although perhaps not at the same rate of 2014. 

“Domestic institutions will look to recycle their capital from overheated markets to higher yielding areas such as Birmingham, with an international presence also continuing to grow in the city.
 
“Whilst a lot of Western money has been seen to date, attracting Far Eastern is more challenging. Marketing of the city and investment in infrastructure has put us in a better position; however, the key to our success is to think of Birmingham as a European city, not just as part of the UK, ensuring we have the economic and civic infrastructure in place to compete. 

“Clearly HS2 and the expansion of the airport will contribute greatly to this position.”
 
The biggest story for the office market in 2015 is set to be the re-emergence of rental growth in the main regional cities, with 2.6% expected in Birmingham.

JLL’s office agency director,Jonathan Carmalt is predicting a 50,000 sq ft pre-letting in the city.
 
“Letting prospects for the next round of speculative office development are far stronger as there will be a more staggered delivery than the last cycle, which were all delivered over a short 18 month period in 2008/2009,” he said.
 
“As occupier conditions are also more favourable, more inward investment is expected following in the footsteps of Deutsche Bank.”
 
Further speculative building was also predicted in the already booming industrial market, although not as much as during the mid-2000’s and in many cases, conversations with occupiers will continue to lead to many being let before practical completion due to a shortage of supply.
 
Generally, there is much to look forward to in the region and Birmingham according to Ian Cornock, JLL’s lead director in the area.

“Investment volumes are up and the city has very strong credentials to sell. Birmingham is hugely entrepreneurial, we are delivering first class education and the Greater Birmingham and Solihull LEP has attracted more direct investment than any other LEP areas,” he said.
 
“This all bodes extremely well for continued foreign investment.  We all have our part to play in what looks set to be a very positive year.”