Mark Evans Head of Knight Frank’s Birmingham Residential Division (above left) and Ashley Hudson Head of Knight Frank’s Birmingham Commercial Division (above right).
In the wake of Knight Frank’s recently released BirminghamReport, we spoke to Mark Evans head of Knight Frank’s Birmingham residential division.
We discussed the exciting period of growth Birmingham is experiencing and the pressure this is bringing to bear on the property market. Mark told us that it is the age old story of the need for more volume allied to a lack of supply.
Birmingham’s strong recovery from the UK recession has seen employment rise across the city over the last few years. Many companies are finding the city an attractive choice for companies seeking to relocate from the travel congestion and high property prices in the South East.
A key consideration tends to be the diversity and the quality of the labour market in the city and surrounds, largely due to the number of top quality universities turning out skilled graduates with highly transferable skills. Also the lower cost of living and good transport links, after all why pay London prices when, if need be, you can be there in under two hours and returning the same day? Birmingham is rightly perceived as offering businesses and their employees far more for much less.
As a result there are a lot of commercial Grade A office schemes coming on stream, which poses the key question of where are all these valuable workers going to live?
Mark explained that, currently, rental seems to be a two tier market, young professionals coming in to the city to work for perhaps one of the major accountancy or legal firms in the city and overseas students coming to one of the universities, as opposed to families relocating to the area and renting while they look for a suitable property to buy.
The rental demographics are showing a changing market profile with incomes and expectations at a higher level than has been traditional in Birmingham, contributing to a high demand for good quality residential property on the lettings market.
He said, “This transformation has gathered pace over the last 18 months, and is directly linked to the improvement of infrastructure in the city alongside the relocation to the city of businesses such as Deutsche Bank.
In the city, we are seeing conversions of old office and industrial buildings, and new builds on brown field sites which are all contributing to a city centre focus, and ideal for upwardly mobile, busy young professionals, drawn by Birmingham’s vibrant nightlife, Michelin starred restaurants and eclectic art scene.
However, employees seeking to relocate their families to the Birmingham area may move into rental while they look for an area with the right schools and transport links a little further out in one of the attractive towns nearby, such as Warwick. Dorridge and Solihull are very popular too due to the great schools and easy transport links into the city centre. Factors such as education, accessibility, and the environment are all key for families when selecting a location.
HS2 is expected to potentially have a massive impact; in studies carried out by Knight Frank in other cities, between those that will be impacted and those that won’t, there are major differences.
On the commercial property side, advancements in sectors such as manufacturing, financial services and technology will provide a huge fillip for Birmingham’s office market.
HS2 Ltd, the vehicle behind the construction of the new high-speed rail line between London and Birmingham and the North of England, has rented nearly 100,000 sq ft of office space, confirming their confidence in the city. HSBC Bank is building a new headquarters in the city and construction work has begun on Birmingham’s most anticipated new commercial development scheme – the transformation of 17 acres at Paradise Circus in the heart of the city centre. The £500m scheme is aimed at revitalising this part of Birmingham; creating a substantial number of jobs, office and retail space and helping to attract significant inward investment.
Ashley Hudson, head of Knight Frank’s Birmingham office, said: “Clearly the trends identified in this report mean that we are going to be living in exciting economic times.
“There is sometimes a tendency to be scared of the ‘shock of the new’ but Birmingham has nothing to be frightened of. With the region leading the charge in sectors such as advanced manufacturing, technology and professional and financial services, our offering perfectly matches the requirements of the businesses of the future.
“And with so many of the resulting jobs likely to be ‘white collar’, the city’s office market is likely to be the obvious beneficiary of the growth resulting from the trends identified in this report.
“There is no reason why the city can’t be every bit as successful in the digital age as it was in the industrial.”