Greater Birmingham: An economic renaissance? - September 2014
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
September 2014 Greater Birmingham: An economic renaissance?
Fast facts
• With a population of 1.07 million, Birmingham is the second largest city in the UK after London
• It is the largest legal and financial services centre outside the capital, with a GVA of £226 billion
• The wider West Midlands conurbation has a population of c.2.5 million, making it one
of the largest regional urban areas in Europe
• Currently 80 minutes from London by train, to be reduced to 49 in 2026 when HS2 is completed
• Within two hours of Oxford, Cambridge, Bristol, Manchester and Leeds; 90% of the UK’s population
lies within a four-hour radius
• Ranked third out of UK cities for retail after London and Glasgow
• Ranked highest of any English city in the 2012 Mercer Quality of Life survey
• Highest number of Michelin starred restaurants in England, after London
• Strong cultural offer including the City of Birmingham Symphony Orchestra (CBSO), Birmingham
Royal Ballet and several leading art galleries and theatres
2 | Greater Birmingham: An economic renaissance? – September 2014
An economic renaissance
Some might still associate Birmingham, the UK’s second largest city, with The economy of the Birmingham and Solihull city region is forecast
poor post-war planning and a declining industrial base. But this could to grow by an average of 2.7% per annum over the 2014-2018
hardly be further from the truth: over the past few decades the city has period, slightly behind the UK average. This implies continued loss of
been undergoing a remarkable reinvention. Following the opening of the manufacturing jobs, a process which may be slowed or even reversed
Bullring in 2003, Birmingham is home to the strongest retail offer in by recent investments. The gains in service sector jobs – which provide
England outside London and the most exciting restaurant scene. The the overall growth – are based on recent trends and the transformation
redevelopment of New Street Station, together with the Grand Central of New Street, the Enterprise Zone and the eventual arrival of
scheme anchored by John Lewis, will finally give the city the transport High Speed Two (HS2) could well accelerate this part of the city’s
gateway it deserves – and soon it will be linked to the main business economy. Given recent successes in attracting relocating businesses,
centre by trams. The acclaimed new Library of Birmingham further there seems to be a significant chance that the city will outperform,
demonstrates how the city that gave birth to the industrial economy is particularly towards the end of the five-year period as the massive
regaining its vibrancy. improvements bed in.
Recent statistics demonstrate that the city is beginning to reap the Together this suggests that forecasts that the city will create some 43,000
economic rewards of this transformation. According to figures released jobs over the five years to 2018 may be overshot. The sectors that
by the thinktank Centre for Cities, Birmingham created some 15,400 will see the strongest growth are professional, scientific and technical
private sector jobs over the 2010-2012 period, the most of any English services (16.5%) and administration and support (15.0%). Rapid levels
city outside London. It remains the largest business and professional of job growth here – higher than the national average – is not reflected
services hub in the regions, with particular strengths in legal and in the overall figures as jobs are still likely to be lost in manufacturing
financial services. According to Oxford Economics, Birmingham’s GVA (-8.0%) and the public sector (-7.6%). Despite a relatively high number
was £226 billion in 2013, the highest of any regional city and the fourth of public sector jobs, the city will not be as badly hit as others as many
highest in the country after Westminster, the City of London and of the posts are in parts of government that are not subject to the most
Tower Hamlets. severe cuts. On the other hand, forecasts of shrinking employment in
manufacturing are based on trends over the longer term. If manufacturing
Private sector job creation 2010-2012, London excluded continues to boom, and investment in this sector continues to be strong,
25,000
this forecast could prove a massive overstatement.
20,000 More importantly, recent analysis from Centre for Cities shows that
Birmingham City Centre – as opposed to the city as a whole – has
15,000 significantly outperformed the rest of the local authority as well as the
UK average, particularly in the creation of private sector, knowledge-
10,000
intensive jobs. This implies that the city centre economy, and the
5,000
sectors that tend to congregate there, such as professional services
and TMT, will strongly outperform the UK average. Birmingham has
0 more research students than any other large city outside London,
Edinburgh
Birmingham
Manchester
Liverpool
Nottingham
Brighton
Aberdeen
Leeds
Warrington
and spin-outs from this will be important in continuing to develop this
economy. Birmingham University is ranked as among the top 100
Source: JLL institutions in the world, along with Warwick University, some 20 miles
Greater Birmingham: An economic renaissance? – September 2014 | 3
to the south-east of the city (30 minutes by car). Its strong research Much of the Plan is based around the transformations that will be
position is extremely important to the wider region. Aston University brought about by HS2, the high-speed rail link with the capital that is
also has strengths in science, engineering and biomedical research; timetabled to open in 2026. Already, though, the project is having a
the latter feeds into the city’s medical cluster. positive effect on the city’s office market; HS2 Ltd announced recently
that it will take 100,000 sq ft at Ballymore and Hines’s Two Snowhill.
Birmingham is also well-placed to take advantage of businesses Both this building and One Snowhill are complete and let and a further
moving out of the increasingly expensive capital. Business costs 300,000 sq ft is to come at Three. At Eastside, the plan has already
and the cost of living are up to 33% below London, and according to resulted in a new public park and other landmark buildings, providing
Nationwide, average house prices are below the UK average and half a suitable entry point around the historic Curzon Street station, the
those in the capital. It ranked the highest of any English city in the world’s oldest surviving piece of monumental railway architecture,
Mercer Quality of Living survey in 2012. The city is unique among the which will host HS2. This should also lead to further regeneration in
conurbations of the North and Midlands in having a luxury residential Digbeth, which is emerging as a hotspot for digital and creative SMEs
area just one mile away from the city centre, in the form of Edgbaston as well as being home to the city’s resurgent independent music scene.
and the Calthorpe Estate, but the wider city is also remarkably leafy
and green. A range of beautiful country towns and villages, including This process will be aided by the city centre being chosen as an
those of Warwickshire and the North Cotswolds, are within Enterprise Zone by the city region’s LEP (Local Enterprise Partnership).
commuting distance. This will provide incentives for development at some 26 sites across
the city centre. Its vision is to create and support a ‘globally competitive
These attractions will be augmented by two major pieces of knowledge economy’ with a focus on professional services, digital
infrastructure. Firstly, the runway extension at the airport – just a few media, communications and technology and the creative sector. It
minutes from the centre by train – will enable links to Beijing, Shanghai, will provide business rate relief of up to £275,000 of business rates
Tokyo, Los Angeles and Johannesburg, among others. Secondly, when relief over five years as well as a fund for new infrastructure – which
the first stage of High Speed Two is completed in 2026, the city will be is covering the cost of the new city tram. A simplified planning system,
just 49 minutes from London. providing greater certainty for developers and other businesses, is
being put into place, while affordable superfast broadband will be
Foreign Direct Investment is already a major source of strength, with available for occupiers.
4,000 jobs created in 2012/13, a 52% increase on the previous year.
Early in 2014, the city took first place as ‘FDI Destination of the Future’ This is not to say that the city and the wider region has not had
at the global investment awards in Shanghai. The most obvious recent problems over the past decade – much of its industrial base has
example of this is Deutsche Bank, which last year decided to take remained in decline. However, it is important to bear in mind that
an additional 135,000 sq ft at Brindley Place. Its website states that Birmingham was an affluent manufacturing centre until the late 1970s,
Birmingham is now “home to one of our largest sales and trading floors with wages comparable to the south east, and that in many ways it is
in Europe [providing] sales, trading, and structuring to a pan-European still making the transition to a more service-led economy.
client base,” adding that London is not the only place to have a career In contrast, deindustrialisation had occurred much earlier and more
in investment banking. comprehensively in cities such as Leeds and Manchester, meaning
that these centres had begun this process some four decades earlier.
The ambitious Big City Plan aims to prepare Birmingham for all these Unlike Birmingham, they no longer have low-value manufacturing jobs
changes, providing greater pedestrian linkages between the city’s to lose, and the successes of their city centres in creating employment
quarters and adding further to the city’s commercial, retail, leisure are clear in statistics.
and residential stock. This will enable developments such as Argent’s
Paradise Circus to bring forward 1.8m sq ft of high quality office space In contrast, the success of Birmingham’s city centre in creating private
while removing the barriers between the Colmore Business District and sector jobs has not always been obvious from statistics covering the
Centenary Square and the Jewellery Quarter. wider area. Furthermore, the resurgence in the manufacturing sector in
the region suggests that the long-term trend may be reversing and that
investment in high-value manufacturing and R&D could be the source
of significant economic growth over the coming decade.
4 | Greater Birmingham: An economic renaissance? – September 2014
Greater Birmingham: An economic renaissance? – September 2014 | 5
A bit of history
Birmingham has been renowned for metalworking and craft industries of skilled workers and a distinctly entrepreneurial culture – aspects that
since medieval times, but its real growth began in the late 1700s, were severely curtailed by the government’s restrictions.
when it produced most of the innovations that drove the early industrial
revolution. The city – by then the largest after Bristol and London – Birmingham’s prosperity and forward-looking spirit in the 1950s and
became home to a host of inventors, entrepreneurs, scientists and 1960s also saw it become the most enthusiastic adopter of the car-
thinkers, including the famous Lunar Society. It produced the UK’s first orientated, modernist planning theories of the era. Under the guidance
building societies and some of its major banks. In many ways this was of Herbert Manzoni, an elevated concrete inner ring road was smashed
the original knowledge economy; over the 19th century Birmingham through the city’s heart, destroying Victorian public buildings and
produced three times as many patents as any other city in the world. streetscapes and forcing pedestrians underground. It also cut the main
business district off from central areas such as Broad Street, Digbeth
During the early part of the Victorian period, cities such as Manchester and the Jewellery Quarter, as well as dividing Chamberlain’s landmark
and Liverpool grew more quickly, often on the back of the large-scale Corporation Street in two.
implementation of innovations from Birmingham. The city still exploded
in size, but it remained dominated by small-scale enterprises and Having lost its previous diversity, Birmingham suffered hugely from
skilled artisans, working in a ‘thousand trades’. However, its developing the collapse of British manufacturing, and particularly the nationalised
prowess in engineering would lead to a further growth spurt in the later motor industry, in the 1970s and 1980s. Manzoni’s brutalism left the
part of the century in which it began to overtake the North West once city an unappealing prospect for the then-booming financial services
again in industrial importance. industries, although it retained strengths in insurance and accountancy.
In the late 1980s, the council convened the Highbury Initiative, which
This was accompanied by a remarkable renaissance in civic pride. examined how the city could prepare itself for a very different future.
Under the ‘municipal gospel’ of Joseph Chamberlain, the city became a The main issue it identified was that the ring road acted as a ‘concrete
global leader, recognised as ‘the best governed city in the world’. New collar’, preventing the city centre from expanding and cutting off urban
civic squares and streets were built, gas and water supplies secured, villages with huge potential.
and the population were given a wealth of parks and libraries as well
as the first ‘redbrick’ university. It also developed as a services centre, As a result of its conclusions, the collar was gradually lowered and
with its own stock exchange and municipal bank and the largest art and pedestrian routes were opened up throughout the city. Centenary
publishing markets outside London. Square and Symphony Hall were built, alongside Brindley Place, a
pioneering mixed-used scheme which remains an exemplar to this
Its population continued to grow off the booming technical and day. Birmingham’s grand 19th century civic buildings, around Victoria
engineering sectors, and by the early part of the twentieth century and Chamberlain Squares, were given the setting they deserve. This
it had become the second largest city in England, with a level of helped the city regain its confidence, change its image and improve its
prosperity that compared to the capital and contrasted strongly cultural, retail and entertainment offer. The regeneration is a process,
with other industrial cities. This gave it a swathe of leafy, spacious not an event however – and the Big City Plan outlines the next steps
suburbs – which, along with earlier examples such as Edgbaston and for this dynamic and proud place. Much has already been achieved,
Bournville, remain one of its great assets today. though – with the New York Times singing the praises of the city and
recommending that its readers visit it rather than London. For British
However, after the war, the government placed severe restrictions on people, Birmingham’s image will be massively improved by the opening
Birmingham’s growth, hoping to spread its affluence to other regions. of the improved New Street station, complete with the largest John
From 1945, industries could not relocate, expand or set up base in the Lewis outside London, as well as the city centre tram.
area without approval from Whitehall. The overall effect was to remove
much of the city’s industrial diversity and concentrate its activities on
the then nationalised car industry. The restrictions were extended to the
city’s burgeoning services sector in the 1960s, despite the fact that it
was the main regional focus on the post-war office development boom,
which had seen banks and insurance companies relocate from London.
Birmingham’s success in the past had revolved around the attraction
6 | Greater Birmingham: An economic renaissance? – September 2014Maximum
2 lines heading
The M40 & M42 corridors
The economies of Solihull, Warwick and Leamington Spa are • Targeting investment at Junction Six of the M42 to facilitate the
significantly smaller in scale than Birmingham, but are growing growth of Birmingham Airport, the NEC and Birmingham
rapidly. Their accessibility to London by both road and rail, combined Business Park
with an affluent and skilled population, gives them a slightly different • Delivering managed growth around four key locations, namely
profile to much of the Midlands, perhaps having more in common North Solihull, Solihull Town Centre, Blythe Valley Business Park
with the South East. The area has a strong concentration of firms in and the Hub – the epicentre of UKCentral which includes the
advanced engineering and technology as well as financial services. NEC, airport, Birmingham Business Park and the proposed High
There are links not just to Warwick and Birmingham universities Speed Rail station
but also to Oxford to the south of the area. The international links • The creation of a special purpose delivery vehicle called UKC
provided by Birmingham airport are also vital. Limited, staffed to procure and deliver schemes identified in a
strategic business plan and accelerating planning, funding and
The prosperity of this corridor, and Solihull in particular, will be implementation
enhanced by the runway extension and, in the longer term, by the • Piloting a Single Local Growth Fund, and attracting additional
arrival of High Speed Two at UKCentral. The masterplan for the area private sector investment
around the airport and Birmingham Business Park is based around
six key action areas:
• Early and bold investment in local connectivity, including new
modes of rapid transit to create a genuinely connected network
• Investing in green infrastructure as a vital economic asset
Greater Birmingham: An economic renaissance? – September 2014 | 7Manufacturing and
the West Midlands economy
Manufacturing in the wider region is being re-energised by international This forecasts a net increase of 146,000 jobs over the decade to 2024,
investment in the car industry. Jaguar Land Rover has invested more with the major drivers being the professional, scientific and technical
than £2 billion over the past two years into its factories in Solihull, and administrative and support sectors, which together account for
Coventry and Wolverhampton, while Chinese company SAIC has circa 45% of the total. However, the figure also assumes a loss of
pumped around £0.5 billion into its Birmingham operations. Much of some 37,00 manufacturing jobs over the period, presumably in the
this is at the high value added, knowledge-intensive end of the industry lower value end of the spectrum. This is the major reason for the
– according to ONS, automotive R&D spending in 2012 amounted to region’s relatively weak forecast. If this is correct, it will lead to a further
£700 million, easily the highest of any UK region. strengthening of Birmingham City Centre as well as areas such as
UKCentral.
The Midlands is also home to a world-leading aerospace hub, based
predominantly around Rolls Royce in Derby. There are significant However, this forecast is based on long-term trends. The past couple
supply chains based around providing engine parts, mechanical control of years have seen a remarkable revival in manufacturing, with
systems and specialist materials to this globally fast-growing industry. confidence and output at historic highs.
This cluster has not always appeared in analysis as it crosses sectoral
boundaries and many of the companies involved do not register as According to a Financial Times analysis of data from HM Revenue &
aerospace specialists. Customs, the West Midlands increased total goods exports by 14%
in the year to September 2013, while England saw a decline of 1.4%
However, Oxford Economics’ Spring 2014 forecasts suggests that GVA and the UK was down 0.2%. The West Midlands now sells more to
for the West Midlands region1 will rise by 3.0% in 2014, slightly behind China than to the US, traditionally its largest export market; sales have
the 3.3% average for the UK as a whole. The nationwide figure is trebled since the start of 2011.
skewed by the exceptionally strong performance of London and parts
of the South East, and in fact growth in the region is forecast to be
reasonably typical of the rest of the country. Over the decade ahead,
the marginally lower average growth figure of 2.4% is expected, again
slightly behind the 2.7% UK figure, although the skewing effect of the
capital also applies.
1
This includes Birmingham, Coventry, the Black Country, Stoke-on-Trent, Telford and the
counties of Warwickshire, Worcestershire, Herefordshire, Staffordshire and Shropshire.
8 | Greater Birmingham: An economic renaissance? – September 2014There have been further announcements over the past year. Jaguar The table below shows the major manufacturing investments
Land Rover has secured a new £4.5 billion export deal with China for in the region over the year to Spring 2014.
the production of 100,000 vehicles. Meanwhile, Chang’An Automobile
Co Ltd, one of China’s ‘Big Four’ automotive operations, is to invest Company Date Jobs Value (£M)
£60 million into a new European Research and Development Centre
Cargill November 2013 N/A 35
in the West Midlands, which will create a further 300 jobs. Shanghai
Automotive, the owner of MG, already has a similar facility in South Endurance Wind Power November 2013 100 N/A
Birmingham. Tata Industries, the owner of Jaguar Land Rover, is to
Geely December 2013 500 80
invest in the £100 million National Automotive Industrial Campus at the
University of Warwick. JCB December 2013 2500 150
If this is sustained, the forecast may be overshot considerably. It Morgan Advanced Material February 2014 40 N/A
is plausible that the West Midlands could be among the strongest Alstom Grid February 2014 100 N/A
economic performers outside London, with the combination of a strong
service-led city centre and a revival in the manufacturing industry in the Heineken April 2014 N/A 58
wider conurbation. Source: Oxford Economics
The forecasts’ assumptions of ongoing manufacturing losses are based
upon the trajectory of the sector over the past decade – by their very
nature they do not attempt to predict changes in direction. However,
recent survey evidence suggests that UK manufacturing may be
about to see precisely the ‘inflexion point’ that economists are wary of
predicting. According to a recent survey from EEF, the manufacturers’
trade association, around 60% of firms plan to invest for growth over
2014, with an eye on improving productivity and overseas marketing.
Also, confidence and purchase managers’ indices within manufacturing
have been at highs for several months, and are currently higher than
in any other sector, further supporting the assertion that decline is
beginning to be reversed.
Greater Birmingham: An economic renaissance? – September 2014 | 9Michelin Man: Glynn Purnell
Birmingham now has four Michelin starred restaurants, more than any other
English city outside London. Glynn Purnell, one of the chefs in question, established
his award-winning restaurant in the city in 2007. He talked to JLL about the city’s
world-class dining scene and its increasingly vibrant leisure offer.
Can you describe how Birmingham became can be converted to bars or hotels. That will explode over the next two
or three years.
such a dining destination?
Birmingham’s always had a good food culture, more than the curry Do you think there is a greater confidence
label would suggest. When I worked at Hibiscus in Ludlow, loads of
Brummies used to visit partly because there was not much in the city and swagger about Birmingham these days?
at that time. The redevelopment of the Bull Ring changed all that, and Yes. It’s a very young city and there are lots of hidden gems. Places
Birmingham became a destination rather than somewhere to drive like the Jewellery Quarter are steeped in history. The car industry is
through. That’s when Jessica’s opened, in Edgbaston. It became a putting faith back into the West Midlands and money back into the
national restaurant of the year in the AA guide and had three or four pockets of ordinary people. There is still lots of great stuff in this city
very positive reviews from London critics like Jay Rayner, Matthew that goes unnoticed. We have to concentrate on singing our praises
Fort and Matthew Norman. They were really surprised that it was in and telling the world what we have here.
Birmingham and that a chef like myself had opted to stay. After that,
Simpson’s moved into town from Kenilworth, and I remortgaged my
house to open Purnell’s. Suddenly there was massive attention from
journalists on the food front.
Does it help promote Birmingham as a
place to do business?
Definitely. We get a lot of people from London, but also international
businessmen who have looked us up in the Michelin Guide. They are
well-heeled and want food of the same standard that they can get in
Paris or Berlin. They want to be looked after and entertained in serious
places. Birmingham can now provide that more than anywhere else in
England outside London.
What will happen to the city’s food and
leisure scene over the next few years?
The new John Lewis and the revamp at New Street will bring more
visitors into the city. It would be great if one of the Michelin starred
restaurants could get two stars, but what I would really like to see
in Birmingham is more independent bars, foodie shops and cool
cafes. There’s also some great Jamaican food in Birmingham. I
think the Jewellery Quarter and, in particular, the Calthorpe Estate
in Edgbaston will go from strength to strength. They are starting to
become more flexible, and some of those fantastic Georgian properties
10 | Greater Birmingham: An economic renaissance? – September 2014Jon Neale Ian Cornock Director Lead Director Head of Research – UK Midlands Region +44 (0)20 7087 5508 +44 (0)121 214 9960 jon.neale@eu.jll.com ian.cornock@eu.jll.com jll.co.uk © COPYRIGHT JONES LANG LASALLE 2014. This publication is the sole property of Jones Lang LaSalle IP, Inc. and must not be copied, reproduced or transmitted in any form or by any means, either in whole or in part, without the prior written consent of Jones Lang LaSalle IP, Inc. The information contained in this publication has been obtained from sources generally regarded to be reliable. However, no representation is made, or warranty given, in respect of the accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage suffered by any party resulting from reliance on this publication.
You can also read
