Fail! What Birmingham Property Cannot Expect In 2019
Fed up with seasonal predictions of what will happen? Bisnow offers a unique take on a topical favourite with predictions for four things that will absolutely not happen in Birmingham in 2019. Check back in 12 months to see if our experts were right.
1. The High Street Retail Will Not Recover
“There will not be any recovery in the retail sector, both the high street and shopping centre markets," APAM’s Simon Cooke said. "Retailers will continue to close shops as they scramble to adopt to consumer habit changes. More CVA’s are inevitable and landlords will have to accept lower rents or invest in substantial capex to reposition or reconfigure shopping centres into ‘fit for purpose’ town centre community hubs.”
Oh dear. Debenhams has problems, ASOS has issued a profit warning, Laura Ashley is closing 40 stores, Blue Inc is in administration yet again. The trail of destruction down the U.K.’s high streets shows no signs of letting up. The 2017 Business Rates revaluation (the first for seven years) has added to the burden.
A popular mechanism for weathering the storm in 2018 has been the use of Company Voluntary Arrangement (CVAs) processes to try and restructure businesses, including rent reductions and store closures. While the process can help retailers, it does not provide a guarantee of recovery CBRE research showed.
“Landlords and investors might resent CVAs as an ‘easy’ way to reduce rents for retailers," CBRE Head Of U.K. Retail Rhodri Davies said. "However, often CVAs provide a better alternative to retailers than entering into liquidation or administration, which should ideally be avoided if the retailer is trading well.”
CBRE examined a sample of 1,419 stores within recent retailer restructurings, and found distinct regional patterns to store portfolio change, with stores in London and the South East typically performing better, despite higher business rates and wage bills on average. At the town level, stores in bigger cities are also more likely to be retained than closed, supporting the argument that prime city centre ‘experiential’ retail is preferred by customers.
2. There Will Be No Outbreak Of Peace In Birmingham’s Planning Wars
Birmingham has always tried to look contemporary, a posture that carries the risk of becoming very rapidly out of date. The legacy of six decades of ultra modernism is a large crop of concrete buildings and mid-century designs which, in 2019, begin to feel like they don’t work. Heritage groups like the Twentieth Century Society vehemently disagree.
A huge amount of Brutalist Birmingham has already gone, including the old Chamberlain Square, whilst others like 1960s icon The BT Tower, continue to hold a place in the city's heart.
“There will not be a meeting of minds between the C20 Society and City Council, to continue Birmingham’s new wave of modernisation," Barton Willmore’s Birmingham-based Senior Partner Mark Sitch predicts.
However, one decision will make it through the planning system, and that will be a preference for more tall buildings in the city centre.
2018 saw the number of tall building applications rise. The city is in the grip of a skyscraper revolution. In the last month Rockspring/Sterling’s 26-storey office tower at 103 Colmore Row moved towards construction. Just days earlier Moda Living's proposals for a 42-storey luxury rented residential tower at Broad Street were approved.
According to Sitch, more are to come. “We will see a race for ever-increasing taller buildings in the City,” he says.
3. Brexit Will Make No Difference
With the House of Commons due to hold its meaningful vote on the government’s Brexit Withdrawal Agreement within the next month, the Brexit drama is reaching its climax. But should Birmingham property be worried?
“The Brexit process will not have a huge impact on the property industry,” Knight Frank Head of Birmingham Ashley Hudson said.
“The situation is rather like the Canadian picture around the Quebec Accord of 1995. This was to control migration issues across Canada. Canadian business got so fed up with it taking years to negotiate that they just carried on trading and ignored the politicians, they worked it out between themselves. I believe, in the main, business today in the U.K. is trading and the capital markets are definitely liquid as we carry on plying our trade, despite the political warfare going on in Westminster.”
4. Work-Life Balance Is Not Going Away
“We are really just at the beginning of this transformation and as traditional landlords reinvent their offering and many new property companies enter the market it will be the genuine tech-enabled offices of the 21st century, ones which support and enable truly joined-up work and lifestyle factors that will drive this sector forward," Slater Heelis Head of Commercial Property Will Henson says.