Major Churn in Birmingham’s Office Space Predicted

December 11 2009

Leases on more than 440,000 sq ft of offices and other premises occupied by the public sector in Birmingham are coming up for renewal or extension in the next five years, causing major churn in the city’s commercial property space.

Stuart Ladds, head of relocation and regional strategy at the Office of Government Commerce, told a conference of 60 senior civil servants from the West Midlands and Whitehall in Birmingham that these lease ‘events’ represent a major opportunity for local government in the city to rationalise its accommodation requirements and reduce costs.

The event – ‘The Government Hub for the West Midlands’ - was hosted by RO Developments at their Newhall Square scheme on the site of the former science museum, and addressed the implications of relocation and sustainability for the public sector.

In addition to advising local authorities on how to rationalise their property holdings, Mr Ladds is charged with moving more than 4,000 civil servants out of London and the South East as part of a drive to shave an estimated £1.5bn per annum off the public sector’s property bill.

Costs aside, just seven per cent of government stock is new and the majority fails to comply with efficiency and sustainability guidelines.

Mr Ladds said: “The constraints on the public purse mean that both national and local government have some tough choices to make.

“For the government, moving civil servants out of expensive property which isn’t fit for purpose is a no-brainer. Equally, local authorities need to look at their overheads. With employees and property being the major costs, saving buildings may mean sacking staff. Clearly, there is an imperative to rationalise.

“In Birmingham, where such a large amount of property is due to come under review anyway, there is a real opportunity to make some significant cost savings in the next few years.”

Birmingham City Council has already begun to examine how it can occupy space more cost effectively. The aim of the council’s “Working for the Future Business Transformation Initiative” is to re-house its staff in modern, sustainable and efficient office space by 2014.  A refurbishment programme is proposed and some buildings, both freeholds and leaseholds, will be vacated to provide future development
opportunities, as well as cash.

At present, the council has 9,000 staff administrative working from 55 buildings totalling some 1.2 million sq ft. The programme is aimed at saving £100million over 25 years, by optimising space usage and lowering the council’s carbon footprint.

It has been reported that the council wishes to reduce the number of buildings occupied to just ten. At present, two major refurbishments are underway – Lifford House and Number 1, Lancaster Circus. One new build, Sutton New Road, comprising 35,000 sq ft and housing 400 staff opened last year, and a 180,000 sq ft purpose-built premises at Woodcock Street, Aston Science Park, is in the pipeline.

However, it’s not just local requirements that will change the face of property occupation in the city. Birmingham is also in the frontline to benefit from the relocation of London civil servants. The city is the chosen home of the Big Lottery Fund and the Office for Legal Complaints is aiming to set up shop here. Birmingham is also aiming to bag further high profile relocations.

Robert Neaverson, associate development director at RO Developments, said it was a major coup to host so many high profile civil servants to the city.

Other speakers at the conference included Keith Gordon, assistant director – efficiency and delivery, of the West Midlands Regional Improvement and Efficiency Partnership (RIEP), set up to help the region’s 33 authorities improve efficiency and services, and Mark Cooke, director for finance and corporate services at the Big Lottery Fund.

Mr Neaverson said: “Many of the people attending the conference are briefed with finding new homes for government departments. It was a fantastic opportunity to showcase the city and what it has to offer.

“Birmingham has an unrivalled range of existing Grade A property and an excellent pipeline, which means the city can provide bespoke accommodation specified to individual requirements. I believe no other city is as well positioned to take advantage of the migration of the civil service out of London.

“The original thinking behind the Lyons report has moved on. Many departments are looking to cluster together in so-called ‘hubs’. This will give them their own front door but at the same time allow them to share resource and facilities, whether that be labour pools, retail/refreshment outlets or gyms. It’s a highly flexible approach and schemes like Newhall Square are set up to accommodate such requirements.”

Newhall Square is London-based RO Developments’ first scheme in Birmingham. The £63million mixed-use scheme boasts a 100-bed Travelodge, the hotel chain’s best performing UK operation, and a contemporary office building comprising 10,855 sq ft over five floors. A new public square is planned for the heart of the development, with further offices, retail and leisure outlets in the pipeline. Office agents on the scheme are Colliers CRE and GBR.

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