Miller Bails Out, Kier Buys In, Is Arena Central About To Change Speed?
Miller Developments has finally brought the curtain down on 18 years of involvement with Birmingham's 2.3M SF Arena Central office scheme.It has sold the 9.2-acre former TV studio site for a reported £30M to Kier Property.
Miller's slow burn at Arena Central means hopes of rapid progress from new owners Kier are high. It takes control of a site with the potential for three further office buildings on the current masterplan. 5 Centenary Square, 4 Arena Central and 5 Arena Central will be phased over the next five to seven years and total 526K SF. Miller said development so far is valued at £530M.
The site is within the Birmingham City Centre Enterprise Zone and therefore benefits from simplified planning and business rate savings. The scheme is part of a major redevelopment of 10 buildings consisting of offices, shops, bars, cafés, restaurants and a hotel through to late 2026.
"This acquisition will substantially increase our activities in the West Midlands and will enable Kier to continue the development of the area as a place where people will want to work, shop and socialise in Birmingham," Kier Property North Managing Director Tom Gilman said.
Miller first bought into Arena Central in 2001.
Pinsent Masons, CBRE and HFF acted for ACDL, and Eversheds and JLL acted for Kier Property.
Those expecting a rapid change of pace might be disappointed. Kier has traditionally been as cautious about speculative development as Miller. Kier has also been engaged in a post-Carillion review of its finances in an effort to reduce debt, which grew to £186M (up from £110M) in the year to 30 June 2018. Average net debt during the year was £375M (2017: £320M), plus a further £185M owed to suppliers and subcontractors.
Kier's response was to sell non-core businesss and set a three-year dedline to reduce debt.
Work on the 240K SF government-occupied office block at 3 Arena Central, Birmingham, began in March 2018.
The building has been pre-let on a 25-year lease to HM Government as part of its regional office consolidation. The development, part of the 9-acre Arena Central scheme, has been funded by Legal & General.
The site has outline consent for more than 1M SF of new office space, including 135K SF at 5 Centenary Square and 210K SF at 1 Centenary Square, the building selected by HSBC for the headquarters of its new ringfenced banking division.