Can Birmingham Real Estate Kick The Car Habit?
Birmingham is a city of cars. The prosperity of the mid-century city was founded on the auto manufacturing and parts businesses, and the city’s post-war planners rebuilt the city with the car firmly in the front of their minds.
Complicated engineering projects like Spaghetti Junction — a motorway interchange whose name is apparent from the air — and the city’s several multi-lane ring roads are a testament. Aston Martin and Jaguar Land Rover are still big local employers with supply chains that stretch round the region. Today no major city in the UK has such a motorised legacy.
Which is, of course, a problem. By striving to be up-to-date in the 1960s and 1970s, Birmingham managed to end up seriously out-of-date by the 1990s. Removing the elevated ring road was the first stage of Birmingham’s late 20th-century regeneration. Now the city seems to be trying to remove the car altogether.
Plans are in progress to limit car journeys across the city, only allowing access from a limited number of points. The suggestion is part of a raft of measures, including a workplace car parking levy, a change to council car parking strategy, and an emissions charging zone, designed to improve air quality. Access to the city from the A38 ring road will be limited, the road could be rerouted, and speed limits on many city streets will fall to 20mph. The new Birmingham Transport Plan, can be found here. A consultation is now underway.
It is just one example of a process that is underway across Europe in particular, with cities from London to Madrid via Amsterdam and Brussels all striving to make city centres as car free as possible. With that in mind, municipalities and real estate professionals across the world will be watching to discover the impact the changes have on Birmingham and its property market.
Birmingham’s property industry is supportive, indeed in many brokerages and development businesses there is real enthusiasm for a green agenda that cuts carbon emissions and cleans the air. But the radical plan will have serious property consequences.
Who Needs Car Parking?
Some in the property industry have been thinking for decades about the problems cars cause in the city. One of those who has done the most thinking is Savills Birmingham office agency director Ben Thacker, who completed a graduate dissertation on the effect of road pricing on Birmingham real estate as long ago as 1998.
“We know the world has changed," Thacker said. "Nobody wants much car parking any more, when tenants renewal leases their parking requirement drops down, and the planning context, which used to be all about minimum parking standards in office buildings, is now about the exact reverse, about maximum parking standards.”
Car parking ratios that were once a generous one space per 1.5K SF are now one space per 5K SF (or even larger). “The fact is employers and employees just aren’t willing to pay for them,” Thacker said, pointing out that the cost of the most swanky secure city-centre parking space has held steady at £3K a year for as long as anyone can remember.
“When I looked at the car problem in 1998 I concluded there would probably be no significant hit to property values in the Birmingham office market due to new rules like road pricing. In the city centre cars have always been the exception, most people have always travelled in by public transport."
If there is a direct impact, it may be on the fringes of a (widely drawn) clean-air charge zone. Thacker guesses that occupiers on the periphery of the zone in locations like Five Ways will have to decide whether to move farther inside and abandon car use, or move farther out and continue using cars. The effect could be to make Edgbaston a desirable spot as office users with occasional car-use needs gravitate toward it.
The hesitation in some property minds is less about minor consequences of this kind, and more about the cumulative effect of so many car-related rule changes. Most are due to come into effect later this year in a big bang that has some observers nervous.
“It’s not the proposals, it’s the speed and rate at which they are implemented," Thacker said. "It’s all happened in a very short period. It’s a question whether it [the various initiatives] should all happen together.” He is among the many Bisnow has talked to who would be interested to read an economic impact assessment.
Birmingham City Council did not respond to Bisnow’s question about the availability of an economic impact assessment for its combined Birmingham Transport Plan and Bisnow could not find such a document on the city council's website. Economic assessments have, however, been produced for individual initiatives like the clean air zone.
Cars Are History
The sharp fall in occupier and developer interest in workplace parking spaces is nowhere clearer than at Sterling Property Venture’s 103 Colmore Row office scheme. Here 220K SF of new office floorspace comes with just 24 parking spaces. That’s a ratio of one space to 9.6K SF.
“The days of the private workplace car parking space are long gone,” Sterling said. “Landlords will repurpose car parking space, most often to provide amenities for cyclists. There is only an economic impact if you really need to use a car but can’t afford to, and there will not be many in that category.”
Howarth rejects the idea that the weight of new policies risks causing an unintended economic shock. “You have to start somewhere on dealing with cars,” he said. “These policies won’t all come into effect exactly simultaneously, and we’ll see a hell of a lot of consultation before they do, and the city council would not want to hurt business in the first place. The council are rightly trying to change people’s habits, and that is commendable."
If you want evidence of the effect of clean air charges and congestion charges, look to London, Howarth said, where such charges have been in place for some time. "I don’t think it has hurt business there," he said. The overall economic impact will be hard to assess but if it turned out to be seriously negative, then policies can always be adapted.
The same relaxed spirit is apparent in the industrial and logistics property sector.
“The prime industrial property markets are outside the city. If there is an impact it is in areas like Digbeth and the Jewellery Quarter where we still have some industrial occupiers. They may move further out to places like Erdington leaving their sites for residential redevelopment. But the flight of industrial users from Digbeth and the Jewellery Quarter has been going on for years.”
Far from causing problems, the city’s car policy creates a development opportunity, Smith said.
Birmingham is running fast to catch up with the no-car culture. It requires a massive shift of perspective for a city quite literally built for, and around, motor vehicles. Whilst some in the property business suspect there may be unintended economic consequences, most see the city council’s policy initiatives as timely and right. And if they change real estate, it can only be for the better.