Why Midlands Business Parks Will Never Be The Same Again
Forget everything you know about business parks, and start saying “sustainable living and work communities”.
According to the region’s developers and brokers, a Midlands office market revolution is underway as housing melds with office space. The big question is, will it work?
They survived several recessions, the dotcom crash, the credit crunch, the (belated) discovery that Warwickshire is not Southern California, and the realisation that Brits like to go somewhere at lunchtime, ideally out of the rain. Despite all that change and reinvention, the traditional Midlands business park has some more changing to do. This time, it is about adding housing.
Developers know that politicians are willing them on as housing grabs the headlines. They also know it makes financial sense to mix uses, and spread risk.
With IM Properties’ announcing plans for 750 homes at their Blythe Valley business park, and, later this spring, the first planning application for the 2.65M SF of offices at 2,000 homes at Arden Cross set to be submitted, it is coming sooner than you think — a matter of months, not years.
Business Parks Could Look Like This
So this is what business parks will look like? Full of cottages, with roses round the door?
Don’t rule it out.
This house is at U.S. investor Liberty Property Trust's Kings Hill, Kent — and it is being hailed as a model for Midlands business parks.
The 800-acre Kings Hill site, developed by Liberty with Kent County Council on a former airfield site, unashamedly mixes housing, leisure and office uses and has attracted significant international tenants such as Barclays, Rolex, Cabot Financial, Marsh, Arthur J Gallagher and Kimberly-Clark.
“You can see how well its going to work in the Midlands if you look at Kings Hill, Kent, owned by Liberty Property Trust,” Knight Frank’s Head of Birmingham Jamie Phillips said. “It’s the same idea — and it works, as a little community, and in fact putting housing on the same site as offices is very clever."
"Residential on the same site doesn’t add to the daytime traffic but it does create the scale to support amenities on the business park. So the shops make money, and stay put, which of course the office occupiers like. Adding houses to a business park could make a huge financial difference to the gym, the coffee shop and to everything else," Phillips said.
Just before Christmas, IM Properties disclosed that it was to press ahead with building 750 homes over 10 years on a 38-acre slice of its 82-acre Blythe Valley business park site, Solihull, close to junction 4 of the M42.
“The ultimate aim is to create something not witnessed outside of the South East and unique to the Midlands," IM Properties Investment Director John Hammond told Bisnow. "A truly mixed-use offer which will provide 750 homes, offices, industrial and leisure space will break the mould of what is perceived to be business park.”
The move comes as the Midlands market prepares for the first outline planning application from the 350-acre Arden Cross scheme.
Like Blythe Valley, the site will be next to the HS2 station at Birmingham International. Also like Blythe, it will be a radically mixed business park with 2.65M SF of offices next to 2,000 homes and new retail and leisure space.
The Office Occupiers Are Going To Love It
IM Properties said office occupiers are going to love having new neighbours.
“This is about extending the use of the site, by mixing up uses and creating a community,” IM Properties Development Director Lewis Payne said. “It sounds aspirational, but it’s important for our well-being agenda and for the occupiers [who] want to get more engaged in the community.”
There are also good practical reasons for occupiers to want housing on-site, particularly for businesses with strong international links or a big geographic reach in the U.K.
“Every business today has people coming and going all the time on placements and secondments and relocations, often internationally. What’s got some potential occupiers excited at Blythe Valley is the opportunity for office occupiers to buy five or six houses in the immediate vicinity of their office,” Savills Director Nick Williams said. “Occupiers think it is so much healthier to be in a proper house than to spend a 12-month secondment in a hotel. It’s the ultimate sustainable business practise. Organisations have been fascinated that they could do that at Blythe Valley.”
The arrival of Solihull’s HS2 station makes this kind of international appeal even stronger, according to Payne.
“Both for us at Blythe Valley and for Arden Cross we couldn’t be better placed for the HS2 connectivity,” he said.
You Could Even Retrofit Housing To Older Business Parks
Opinions are divided — practicalities might be tricky — but the prospect of adding housing to existing Midlands business parks is not being ruled out.
“You would need enough land to make the housing element real — not just a token apartment block. That wouldn’t work,” Savills' Williams said.
“But when the first-generation business parks reach the end of their economic life, and the 1980s blocks are not suitable for today’s market, then it could be a good use for the sites, if you can do it with enough scale to have an impact. If a business park lost a large slice of 1980s office stock you could create landscaped residential, and at that point developers can and will start looking at this option.”
But if residential depends on 1980s blocks becoming vacant, then the idea will have to wait, some argued. “It all depends on office buildings becoming vacant, and they just aren’t,” GVA Director Adrian Griffith said.
For example the immediate prospects of this happening at the 148-acre Birmingham Business Park seem slight. That is because the park has no redundant units, and refurbishment has kept the office stock fresh. As a result vacancy rates on its 2.4M SF of offices are at record lows.
“Birmingham business park is already reinventing itself. The last three or four years have seen around 50K SF of refurbishments a year,” Griffith said.
“Refurbishment has been driven by demand, which is strong. Availability at the park today is just 8%, which compares with 25% in 2015.”
So We're All Going To Be Happy — Particularly Developers
IM Properties’ Payne expects other business park developers to follow their lead. “Others will go the same way because it is extremely sustainable to live, work and play on one site. The old word for this concept is ‘village'."
Truly a village? “It could work in some locations, those business parks that have a lot of land that is never going to be used for office development, so it makes sense to look at alternative uses,” Griffith said. “After all, developers can’t sit around waiting for office pre-lets, because they are few and far between. Every developer is considering alternative options, although residential won’t be the answer for everyone.”
UK Central’s Arden Cross site could make an obvious place to expand the resi-meets-business park concept, KWB Director Mark Robinson said. “Arden Cross will be the next big business park opportunity with residential, industrial and office — it will be exciting, because they have the money to do the infrastructure, which is always a hindrance to schemes like this.”
So everyone will be happy? Not quite. Robinson maybe speaks for many when he says he likes business parks just the way they are. “Personally I prefer a business park to be a business park — but maybe that’s a blinkered view."