Five future trends shaping Birmingham's commercial property market 

Like the rest of the UK, for the Birmingham economy Brexit is a challenge, the size and scale of which is unknown. We were promised a vote to leave would hit the economy hard, only to see benign trading conditions quickly re-emerge.

Indeed the IMF recently upgraded its UK GDP forecast for 2016 to 1.8% - the strongest rate of growth the IMF is predicting for a G7 nation.

Being in the EU may add 50 or 100 bps to the annual GDP percentage growth rate, but it is far from being the sole driver for the UK economy. As a G7 country with a population of 65 million people, firms like Coca Cola and BMW will always want to sell to the UK consumer market.

Knowledge industry employers like PwC, KPMG, and Aon are sure to want to continue accessing Britain’s skilled workforce. Indeed recent economic indicators have been encouraging. UK GDP growth in Q3 was 0.5%, coming in ahead of expectations and exceeding the 0.3% figure for the Eurozone. 

The government has offered reassurances to car makers on EU single market access, and the FTSE 100 equities index has been trading above pre-referendum levels for some time.

Birmingham remains a cornerstone of the UK’s skilled based economy, which is why major banks like Barclays, Deutsche Bank, HSBC and RBS have relocated thousands of jobs to the city in recent years.

Nevertheless, with the approach of Brexit and the changes brought about by digital revolution, we see new industries emerging in the coming years, and generating additional sources of demand for offices and homes.

HS2 moving closer to reality should accelerate the pace of change.

Five future trends Knight Frank predicts will shape Birmingham’s future economy and commercial property market. 

1. Second wave tech demand

In the US, the first wave of tech office demand was heavily concentrated in San Francisco

and New York, but it has now spread out into a range of regional cities, like Austin, Portland, and Pittsburgh. Birmingham with its large universities and extensive rail connections would be a logical second wave tech location for demand spilling out of London.

This would also bode well for the housing market, given the impact tech has had on house prices in San Francisco, and New York’s tech districts like Chelsea and Brooklyn.

2. Re-shoring manufacturing

As hi-tech manufacturing moves towards ‘dark factories’ full of robots, the need to be in low labour cost countries is gradually disappearing. As manufacturing activity returns to the UK we

are predicting the creation of more desk-based engineering jobs, as humans will be needed to oversee and direct the robot factories; with the West Midlands as a logical hub.

3. Mexican wave service centres

Some law firms use ‘Mexican wave’ systems whereby London-based rainmakers win work, which is carried out by junior lawyers in regional offices.

This model could be applied to a range of service industries. Given the UK’s position in the global time zones, Mexican wave centres in Birmingham could support front offices in the Far East, and US East Coast by operating shift systems.

4. Robotics, Drones and Autonomous Cars

These look set to form the next big wave in the tech revolution, which plays to the West Midlands’strengths in engineering and the automotive industry. 

However, now more research and development (R&D) takes place via computer modelling, car and robot makers can offer their R&D staff a better quality of life by basing them in the centre of Birmingham, rather than in traditional motor manufacturing locations.

 This could also lead to more demand for homes in or near the city centre, given the popularity of living near work among skilled young professionals.

5. Fintech ( Financial technology)

FinTech firms have driven the development of London’s Shoreditch tech village. However, development of the Shoreditch tech hub has been biased towards wholesale markets trading.

With Birmingham emerging as a centre for UK retail banking, there could be an opportunity to position the city as the retail FinTech centre, applying technology to consumer banking.

This may have implications for the housing market, given Shoreditch’s tech-driven office boom has been shadowed by strong house price growth.

For further information, please contact Ashley Hudson or find out more about Birmingham and commercial investment and leasing opportunities and visit Knight Frank Birmingham.