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Developing the West Midlands' future

Sue Simpson


United Kingdom

With multi-billion pound developments planned across the West Midlands, Fieldfisher outlines opportunities for developers and suggests how they can prepare to make the most of the building boom.

As the UK emerges from lockdown, focus is intensifying on the West Midlands as an engine of regional growth in a country facing various economic challenges post-Covid-19.
There are likely to be particular opportunities for developers and regeneration specialists in the West Midlands, arising from the construction of HS2, which will complement the region's already well-developed transport network.
Specific drivers of new development, redevelopment and regeneration in the region include:

  • A relocation of business and talent away from London and the congested South East of the UK, with Birmingham and the West Midlands in prime position to absorb much of this outflow;
  • The reinvigoration of many small and medium-sized town centres with new types of business, as Covid-19 accelerates the shift from "bricks to clicks" in the retail and services sectors;
  • The growth of regional entertainment, leisure and hospitality industries as wealth disperses from the capital to the UK regions;
  • Increased investment in digital connectivity, including fibre to the premises as part of the nationwide roll-out of 5G, to support further modernisation of the West Midlands economy;
  • Enhanced commercialisation prospects for start-ups and growth companies, benefitting from lower labour and overhead costs than in the South East.
West Midlands businesses need to position themselves to make the most of these opportunities, as competition from other regions, particularly the booming North West, is likely to be fierce.

What can West Midlands businesses do to make the most of these opportunities?

1. Be prepared to adapt

Flexibility and scalability are essential for businesses of all sizes to weather changes in customer behaviour, supply chain disruption and evolving regulations.

The West Midlands has advantages over other regions when it comes to businesses adapting their arrangements to circumstances, such as more choice of premises and construction sites, better infrastructure, less competition for market share and the skills needed to refocus a business.

2. Know your counterparties

With an influx of new businesses expected in the West Midlands, including international investors as well as companies from elsewhere in the UK, it is important to form good relationships with new and prospective clients.
Many companies fail to establish clear, regular communication channels with counterparties, including suppliers, customers, investors and joint-venture partners, which can turn out to be highly problematic if difficulties arise later on.
Aside from good business communication, in the real estate sector in particular, anti-money laundering (AML) and counter-terrorist financing (CFT) regulations have become increasingly stringent, so it is also important that businesses have appropriate policies and procedures for dealing with these compliance aspects of commercial relationships.

While it is advisable to commence and commit to frequent dialogue with counterparties from the outset, it is never too late to try to establish relationships and thereby reduce the risk of communication breakdowns or compliance oversights.

3. Review your contracts

The shock of the Covid-19 lockdown emphasised the importance of identifying and seeking to mitigate any risks in new and existing contracts.
For developers, one of the most prevalent risks is construction disputes. Construction disputes are often complicated and multifarious, meaning they take a long time to resolve and are frequently further delayed by avoidable obstacles which can be obviated by good contract drafting.

It is sensible to think about introducing force majeure and material adverse change clauses into contracts, auditing counterparties, buying insurance and backing up supply chains, wherever possible.

4. Nurture your relationships

It is however important to remember that contracts are just formalisations of relationships, which need to be preserved beyond what is set out in writing.

Fostering the relationships that underlie these contracts can help businesses reach mutually acceptable middle grounds with counterparties when it comes to performing contractual obligations in difficult circumstances.

What next for the West Midlands?

Economic reset

In addition to the many challenges represented by the Covid-19 lockdown, the sudden jolt to UK PLC also represents an opportunity to reset some parts of the economy and channel investment into new industries and new parts of the country.

From this perspective, the West Midlands, with its major infrastructure boost from HS2 and Birmingham International Airport, has a head start on other parts of the UK in many respects.

Bricks to clicks

Many West Midlands highstreets were already struggling before the arrival of Covid-19 and the shift away from bricks and mortar retail exacerbated by the lockdown has reinforced the need for local authorities to think about the future of town centres and high streets.

The upside of this shift is that the market for warehouses and fulfilment centres to serve the thriving e-commerce market is surging, and the West Midlands are in the optimum geographical (and infrastructural) position to service this industry for the whole of the UK.

Similarly, the shift to remote working practices and rapid adoption of digital tools by previously low-tech businesses potentially creates a need for more flexible office spaces that provide collaborative environments for nomadic workforces.

This may lead to a reduction in high-density, city-based working and local governments will need to cooperate with investors and developers to help retrofit cities and come up with creative, sustainable ways of accommodating a shift in working patterns, commuting and shopping habits.

Brain gain

Rising student numbers and the growth of universities and further education providers in the West Midlands presents several opportunities for developers and their supply chains.

As well as expanding university premises and student accommodation, the region also stands to benefit from an expanding local talent pool and the spending power students bring, particularly for leisure and entertainment businesses.

New kinds of job

Traditional manufacturing faces an uncertain future and the Covid-19 crisis illustrates the need to further modernise the West Midlands economy to reduce its vulnerability to future economic slumps.

This is likely to involve a shift to knowledge-based economy driven by data and ideas and will rely on greater investment in digital connectivity of homes and upskilling certain categories of workers to help ensure better job security and career progression prospects.

The West Midlands ecosystem

Given the clear commitment to its major infrastructure, commercial and residential development projects, the success of the West Midlands as a UK regional hub looks set to continue, regardless of the anticipated economic downturn caused by the Covid-19 pandemic.

The HS2 project in particular has begun connecting small companies, large companies and investors to help increase economic benefits and sustainability, by embedding circular economy principles and digitally enhancing productivity in HS2 itself and the wider projects planned around the railway.

One of the West Midlands' main advantages is its combination of attractive scenery with affordable places to live and thriving urban centres that support both jobs and entertainment opportunities.

Maintaining this balance is key for developers, especially where greenbelt boundaries stand to be altered, to ensure that the West Midlands continues to be a flourishing economy and community.

For more information on Fieldfisher Birmingham's real estate, construction and planning expertise, please contact Susan Simpson, Helen Andrews or Dinah Patel respectively. For a snapshot of our development and regeneration experience, download our Birmingham Real Estate team's recent development and regeneration experience.

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