After investing hundreds of millions of pounds in commercial property in the city of Birmingham, American commercial property giant Hines has continued with further new forays into the UK’s largest second city.
The acquisition of One Eleven Edmund Street is the first commercial property investment outside of London for the Hines Pan-European Core Fund, which has assets valued at around £23 billion. Completed in 2003, One Eleven Edmund Street is currently occupied by the law firm Gateley and was previously owned by commercial property fund IVG Institutional Funds GmbH. It houses 44,000 sq ft of space.
Together with investors Moorfield, the company last year acquired large amounts of commercial property at Brindleyplace, the award-winning business and leisure destination in the heart of Birmingham. Earlier this year it teamed up with Irish developer Ballymore to continue work on the stalled Two Snowhill scheme – a project that is being funded through the firm’s European Development Fund II.
Anthony Leonard, Director of Hines UK, said of the recent Birmingham purchase: ‘This is a high quality building in a great location and Gateley is a successful and highly respected company.’
Hines was advised on the commercial property deal in Birmingham by GBR Phoenix Beard, who said the city of Birmingham still offers good value for commercial property investors.
Simon Robinson from GBR Phoenix Beard said: ‘What we have seen on the back of this is lots of funds looking to the regions where they are looking for fairer value and less competition.’
The strength of the London commercial property market at the moment, in large part down to its status as a safe haven for investors, means that it is quite expensive for prime commercial property. Additionally, competition is quite fierce in the capital, particularly in the West End.
He argues that investors are looking to move into other UK regions such as Birmingham because the activity in commercial property there is less intense. UK insurers, pension funds and foreign investors are looking to key regional cities like Birmingham in the Midlands and Manchester in the North West as sources of commercial property investment.
Regional investment is a path Hines’ European commercial property office seems to be following, with investment in Birmingham of £200 million last year. This investment included five of Brindleyplace’s main office blocks as well as the car park, the Costa Coffee building, the Ikon Gallery and the Crescent Theatre, and was on record as being one of Birmingham’s biggest ever commercial property deals.
Another significant boost for Birmingham was the news earlier this year that Hines had reached a deal with Irish commercial property developer Ballymore to finish the troubled second phase of its Snowhill scheme. The site had sat dormant since 2009 after the credit crunch saw funding withdrawn. The majority of the Snowhill building has already been pre-let to Wragge & Co and it will sit next to the more successful phase one of the commercial property development, currently occupied by KPMG and Barclays.
