Some of the world’s leading investment companies are joining forces to explore the possibility of developing Birmingham’s huge Wholesale Markets site.
Birmingham Alliance, owners of the Bullring shopping centre, has signed a memorandum of understanding with US property giants Hines.
The deal commits the two to work with each other on acquiring land and could eventually result in the transformation of the valuable 21-acre site in Digbeth.
The move unleashes the buying power of the Birmingham Alliance – partners include Henderson Global Investors, the Australian Future Fund and Hammerson – and the Hines conglomerate, which has funded major development projects across the world including the EDF Tower in Paris.
It also forms a strategic alliance between the Bullring and Hines, the intention being to make sure that a mixed-use development on the markets land complements rather than rivals the Bullring and opens up pedestrian links between Digbeth and Birmingham’s largest shopping centre.
A successful redevelopment of the markets would also meet a key city council aim of expanding the city centre to the south.
With a £600 million refurbishment of New Street Station under way and the possibility of a terminus for a high-speed rail link being built in the area, it is certain that the markets project will become even more of a mouth-watering prospect for investors.
Combined assets of the Alliance and Hines easily exceed £100 billion and the pair’s keen interest in Birmingham underlines the importance of the Wholesale Markets site, which will become vacant when stallholders move to a new out-of-city location in Witton.
Because the scheme is viewed as a long-term project, progress is unlikely to be stalled by the recession.
The Alliance and Hines have begun talks with other landowners in the area, including the Gooch Estate and Dublin-based developers The Naus Group.
The Naus Group already has planning permission for a £150 million mixed-use scheme fronting High Street Deritend.
The scheme, called Connaught Square, will comprise 631 new apartments, a 180-bed hotel incorporating 36 serviced apartments, shops, offices, bars, restaurants, more than 1,000 underground car parking spaces, two new public squares and public amenity space.
But the Birmingham Post has learnt that the Alliance and Hines are urging the city council to move quickly to draw up a masterplan for the area.
The council has not yet awarded preferred developer status for the markets scheme and the land remains in the ownership of the local authority.
Henderson Global Investors recently met council chief executive Stephen Hughes and assistant regeneration director Philip Singleton in an attempt to get a clearer understanding of the type of development envisaged on land currently occupied by the markets. They were told that ideas are still being worked up and that firm proposals are unlikely to be on the table for at least six months.
It’s understood that the Alliance and Hines are interested in exploring the possibility of a joint venture with the council. One idea is that the markets site will remain in the council’s ownership, giving the local authority future value from a share of rents.
There are fears that delays in making a decision have been compounded by the council’s failure to appoint a new strategic director for regeneration following the resignation of Clive Dutton, who left Birmingham in September to take up a new job in London. Mr Singleton will also leave the council in the new year.
An advertisement for Mr Dutton’s replacement is yet to appear and the council has admitted it is considering changing the role and may transfer some of the responsibilities of the Development Directorate to the private sector.
Birmingham’s Big City Plan suggests land occupied by the markets could be used for a variety of purposes including expansion of the city centre retail and commercial district or the creation of a new entertainment zone with open air markets.
In an interview given on the eve of his departure, Mr Dutton suggested constructing a four-acre lake at the markets site, with a mixed-use development including luxury apartments overlooking the water.
Mr Dutton added: “It’s got to be something that stands out on its own. It’s got to be water-related, because that’s something Birmingham does not really have at the moment.”
Hines, which has never publicly confirmed its interest in the markets site, joined the Alliance in declining to comment on the latest developments.
A Birmingham City Council spokesman said: “Discussions about the existing Wholesale Markets site and the wider surrounding area are ongoing but we are unable to go into any further detail at this time.”