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Ben Parkinson
Ben Parkinson
  • 3 Minute Read
  • 23rd January 2013

JLL predict strong year for Midlands commercial property

Jones Lang LaSalle (JLL), the provider of global real estate services, has tipped the Midlands’ commercial property market to outperform all but the South-East in its latest report released this week.

Unveiled at a specially arranged event in Birmingham on Monday, the report details JLL’s predictions for the country’s property markets in 2013. Projections suggest that GDP growth is likely to be in the region of 1.3% in the West Midlands, whilst the East Midlands has a similarly healthy outlook for growth of 1.2%.

Jon Neale, head of research at JLL UK, suggested that the regional centres of “Birmingham and Nottingham have forecasted stronger growth than many of their counterparts”, having been tipped for growth levels of 1.4% and 1.8% respectively.

Having stated that “the Midlands appeared to be more confident about business prospects than those further North”, Neale was quick to sound a note of caution on the over-reliance on prospective growth in the industrial sector, adding: “The region needs to nurture start-ups and ensure the prosperity created from manufacturing is used to develop emerging and hi-tech industries to provide sustainable long-term growth."

However, having witnessed significant job losses in the predominant industrial sector as a result of the financial crisis, JLL said that their predictions were buoyed as a result of recovery in the occupational markets and continuation of talks on speculative funding for industrial projects.

Allan Wilson, JLL’s head of capital markets for the Midlands, said: “We are already seeing evidence of speculative development in the South-East in very selective markets. No spec funding was witnessed in our region in 2012, but we saw a number of funds backing developers on land deals and Jones Lang LaSalle acted on two deals putting equity backers together with developers.

“The next phase will be to see spec funding but scheme choice will be highly selective, prime only and likely to be led by one of the specialist warehouse developers."

Guy Grainger, the recently appointed chief executive of JLL, indicated during his speech that – in spite of the recession – the Midlands’ commercial property market would continue to play a vital role in in bolstering the local economy, but most likely in a different guise.

He said: "Retail is changing with the UK embracing on-line retailing more than any other country in the world, but far from doing away with bricks and mortar, retailers are looking at omni-channel distribution and for the first time Amazon will add a store into its mix.

“Towns and cities need to adapt in the same way retailers have adapted to changing consumer demands and look at developing the public realm, adding more leisure facilities and making parking simpler and more low cost to attract people. "

Ian Cornock, Midlands lead director at JLL, stated that governmental support for significant infrastructural developments is likely to come to fruition in 2013, with analysts anxious to observe whether the projects will have a tangible effect on the regional property market.

He said: "In the short term we would see the positive effects in Birmingham of the first phase of New Street opening, the extension of the Metro and the new runway at Birmingham Airport and in the long term we have HS2.

“However the blighting of land along the route would need to be resolved sooner rather than later, so that important proposed developments could proceed such as UK Mail's £25m expansion of its depot at Washwood Heath. In Nottingham, we have phase two of NET Tram, the dualling of the A453 and redevelopment of Nottingham train station."

The Midlands’ office space market is likely to grow as a result of such projects, whilst a combination of high property prices in the South-East and the advent of flexi-working technologies have led bosses to adapt a more pragmatic approach towards commercial occupation.

One such example is the recent sale of Linwood Grove – previously a WWII bomb aimers’ training premises - on Martin Moor, Lincolnshire. Adjoining the former Lancaster Bomber base of RAF Metheringham, the building was once used to suspend trainee bomb aimers from the ceiling to study aerial photographs.

It has since been converted into a mixed-use office space and light industrial unit, which has been purchased for lease by local estate agents Hodgson Elkington. Partner Sam Elkington said in a statement that he was pleased to help preserve piece of national heritage.