The long-awaited redevelopment of New Street Station in Birmingham will give a major boost to the commercial property fortunes of the surrounding area, say Ed Jones and John Dillon, of Lambert Smith Hampton.
Long championed as vital to the transport infrastructure of Birmingham and the wider region, the redevelopment of New Street station will also have a large impact on an area of about 2,000 acres.
This covers the Hill Street and Smallbrook Queensway area and will become referred to more commonly as the Southside area of the city.
Like New Street station itself, it bears the scars of its origins in the 1960s and nowhere is this more obvious than along Smallbrook Queensway with its tired-looking and outmoded buildings.
The same is true for the surrounding streets, which the regeneration of Birmingham seems hitherto to have passed by. All that will all change, however, as part of the multi-billion pound transformation of the area.
Architect Urban Initiatives, now formally appointed by the city council, is drawing up plans that are said to include at least four skyscrapers in a mixed-use development. This scale of redevelopment can only be positive and is in line with Birmingham’s ambitions for the future.
The new-look New Street station will boost the office market considerably. While Eastside is likely to be the most immediate and obvious area for the next generation of office space, Southside will play a significant role in meeting growing demand.
As an office destination, it also introduces more capacity into the city. This is much needed as the city is already bursting at the seams.
Currently rents are low, a reflection of the quality of the stock available to a large extent as well as the overall perception of this part of the city, but both these will rise.
Rents currently range from £8 per sq ft to £17.50 per sq ft but expect rents to rise dramatically. While they are unlikely to challenge the very core of the city, they could compete favourably with much of the rest.
The transport planning case for the station has rightly focused on easing much of the congestion that has dogged it as a transport hub. The result is that the capacity of New Street will double.
The knock-on effect for the commercial property sector is that with easier access, more people will opt to work within the extended heart of the city. For businesses looking to recruit the staff they need, it will be a major boon.
This new generation of buildings should also be far more efficient and greener than the ones they replace and there is perhaps an opportunity for Birmingham to use it as a showcase for its environmental building credentials.
The area will be a logical extension to the main city business core and it will no longer appear so much out on a limb because of the re-siting of the station itself. Indeed, the perception that New Street station is simply a back door into the city centre should disappear.
Few would argue that New Street has not had the most positive effect on how visitors perceive the city. For many it offers their first impression and it is, at best, hardly inspirational.
It is in the very heart of the city and the decision to go ahead with the redevelopment within it rather than try to build a new station entirely away from here – an option seriously mooted in the past – will pay dividends.
For the private sector investor, the scheme offers big opportunities. The public sector is already committed to the majority of the £550 million overhaul of the station itself and the related infrastructure.
Historically, this publicly-backed level of investment has been the catalyst for the private sector. Developments such as Brindleyplace were closely linked to the decision by Birmingham City Council to invest in the International Convention Centre complex.
For investors the costs of development here should be lower than in the traditional business core, bringing the prospect of better returns on their investment.
It could be argued that in the current tight credit market, the timing could be better but none of this will happen overnight, of course. The new station will not come on stream for at least three years and it is the nature of such projects that this has to be the most optimistic of outlooks.
That timing should work in investors’ favour as they sort themselves out following recent events. Well-funded private organisations are best placed to take advantage of the development but do not rule out a return to large-scale institutions looking for much wiser and more sustainable investment strategies than they have perhaps demonstrated of late.
Inevitably, perhaps, comparisons are being made between New Street and its surroundings and Kings Cross in London.
It would be wrong to bracket the two together – New Street has never been the den of iniquity that once summed up the then seedy Kings Cross – but the huge investment into Kings Cross and the adjacent St Pancras, the new home of the Eurostar service, has had a very positive regenerative effect.
This investment could do likewise. The decision finally to commit serious sums of money to delivering a railway station fit for purpose in the heart of the country is as welcome as some might say it is overdue.
The challenge for the property sector is to identify and exploit the undoubted opportunities it presents.