A pair of empty office buildings in Birmingham city centre is to be turned into a hotel, it was announced yesterday.
Property developer Opus Land, which owns the adjoining eight-storey buildings in Waterloo Street, originally intended to refurbish them for commercial use. But the property market downturn made the Warwickshire-based company rethink its plans and in a “lateral approach” it struck a deal with hotel operator Whitbread.
The buildings will now be transformed into a Whitbread Premier Inn – the country’s largest and fastest-growing hotel brand. The 1960s scheme comprises two adjacent but independent eight storey buildings of 18,907 sq ft and 32,496 sq ft. The entire 51,403 sq ft has been pre-let to Whitbread Hotels and Restaurants on a 25-year lease at a yearly rental in excess of £1?million.
The Premier Inn, Birmingham Central, will be a 152-bedroom facility and is a “developer turn-key deal” with Opus financing and implementing the comprehensive refurbishment and fit-out required to convert the building to its new use.
A subsequent investment of nearly £1??million by Whitbread will ensure interior furnishings, fixtures and fittings are consistent with its 560 sister hotels around the country.
John Bates, the UK and Ireland head of acquisitions at Whitbread, said: “Waterloo Street characterises the approach of the Premier Inn property team in its drive for expansion, both in the Midlands and nationwide, to secure high-return sites.
“Not only is it a superbly located, premium site, but its development as a hotel illustrates our ability to form strategic developer partnerships in the interests of growing the business. By acquiring estate from sectors experiencing market difficulties we can create viable, financially strong propositions in a strong and buoyant industry.
“At present about a quarter of all development opportunities presented to us are initially office or residential stock.”
The developers say they expect the new hotel will attract about 70 per cent commercial and 30 per cent leisure customers, traffic with most non-business guests staying at weekends. The current economic downturn is already stimulating increased demand for high quality, centrally located accommodation at an affordable price.
Opus Land managing director Richard Smith said that although the property was originally bought to develop into a prime office scheme “prevailing market conditions have encouraged a more lateral approach to alternative usage”.
“The Whitbread deal is indicative of this mindset change and it is gratifying to have found such a high value solution to the challenges presented by the current economic climate,” he said.
Whitbread is the UK’s biggest hotel and restaurant company and its brands include Premier, Inn, Beefeater, Brewers Fayre and Costa Coffee. The company employs more than 33,000 people and serves 8.5 million customers in 1,500 outlets every month.