Birmingham has remained resilient during the economic downturn with eight new developments under construction in the city centre in 2010
According to the latest Drivers Jonas Deloitte annual Crane Survey the figure reflects a rise from six new construction starts in 2009.
The research, which was launched this morning in the city, found that similar to the period 2008/2009, development activity remains diverse with only one of the new starts comprising an office scheme.
Other new starts include three residential schemes, one student accommodation scheme, one retail-led mixed-use project, a large public sector development (Library of Birmingham) and the redevelopment of Edgbaston Cricket Ground.
However, despite the encouraging number of new starts, there is a third less office space and a fifth less residential space under construction compared to this time last year.
“This year’s Crane Survey is more encouraging than many expected,” said Jill Astley development director for DJD (
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Office development has continued to slow as predicted in the 2009 Crane Survey with only one new office start – the 196,000 sq ft owner/occupier scheme for Birmingham City Council at
A total of 182,270 sq ft of office space will be delivered this year across four schemes with the majority situated within The Cube which will deliver 110,000 sq ft of offices, around half of which has already been occupied by the Highways Agency. Although a further 352,300 sq ft of office space is under construction in
“The fact that we are seeing a relatively small amount of new space delivery to the market this year is not a bad thing,” said DJD director Philippa Pickavance. “With around 1.2m sq ft of grade A office space still available out of a total stock of 17m sq ft, and 3.4m sq ft of vacant office space, we believe this will mean no new speculative office building in the city for a number of years, with continued poor demand for space at all levels
“However on a positive note, the city does have a good mixed grade stock to offer occupiers who are in the market.”
Astley added: “Looking forward, we do not foresee any speculative construction starts for purely private sector office schemes during the next two years, although small office elements may be incorporated into larger mixed-use schemes.”
Take-up in the city is off to a reasonable start for 2010 with 183,400 sq ft transacting in the first quarter, 51% up year-on-year.
Take-up was again dominated by a few larger deals and then many smaller deals, including the Office of Legal Complaints committing to 46,000 sq ft of space at Baskerville House this quarter.
Due to market pressure, 2010 has continued to see headline rents decline and incentives increase. Headline rents on prime grade A space are holding between £25 and £27.50 per sq ft, with a variety of additional grade A space available for between £18 to £25 per sq ft. Reasonable second hand accommodation ranges from £12 to £18 per sq ft.
In the residential market, activity has picked up this year with three new starts. Delivery volumes however remain much reduced with 456 units completing in 2010 and 334 scheduled for 2011.
All of the residential starts are situated outside of the city core and have been supported by public funding through the Homes and Communities Agency’s Kickstart scheme. Kickstart funding has also seen Masshouse return to the Crane Survey following the development’s stall in 2009; the 167 apartments are now scheduled to complete in early 2011.
However, the report said that the unlikelihood of future Kickstart or public funding also means solely apartment based schemes are also improbable.
Student accommodation continues to rise with the survey identifying a new scheme on
“As developers seek to maintain profitability and with financing remaining tight, we expect to see more non-traditional and mixed-use developments such as those identified in this year’s survey coming forward,” said Astley. “Despite long planning and lead-in periods developers must remain as flexible as possible to capitalise on niche opportunities and changing market conditions, and the delivery of more varied schemes is likely to result from this.”
