Sean Mulryan's Ballymore Group is about to start work on the development of a 400,000 sq ft commercial project in Birmingham just as the English city is undertaking a promotional campaign to become a global financial services hub and a more affordable alternative to London.
Last week Birmingham City Council gave Ballymore the green light for a landmark 17 storey office building known as Three Snowhill on a gateway site at the heart of the central business district providing 380,000 sq. ft. of Grade A offices plus 30,000 sq ft of ancillary conferencing, restaurant and health club facilities.
"We aim to start on site by Q4 2015 with completion by end 2017 / Q1 2018," says director Paul Keogh.
Ballymore has confirmed that it is in advanced discussions with an institutional funder to provide finance for the build and a report in Estates Gazette says M&G Real Estate is understood to be under offer to buy it for around €205m. A Ballymore spokesman said this was speculation.
Mr Keogh confirmed that the developer also had discussions with tenants and that these negotiations were been put on hold pending finalisation of the funding agreement "which will enable us to exploit our first mover advantage and deliver space into a market increasingly characterised by stock shortages and improving rental terms."
He is not quoting rents at present but expects lettings to achieve rents in excess of £30 per sq ft (€444.5 per sq m) rising towards £35 quite quickly due to supply shortages and the growing success of Birmingham in attracting major corporates out of London.
Ballymore looks set to benefit from Birmingham City Council's marketing campaign as the council has designated the Colmore business area, where Ballymore plans to develop Three Snowhill, as the location for its financial services hub.
As the name suggests, Three Snowhill is Ballymore's third major project near the Snowhill railway station and brings to 1 million sq ft its grade A office space in the city centre campus. It sold off the other two buildings with One Snowhill now owned by Union Investments Real Estate of Germany while M&G owns Two Snowhill. Occupiers in those offices include Barclays Bank, BDO and Wragge, a major legal firm.
A spokesman for Ballymore said the letting of the last available space in Two Snowhill to HS2, and the launch of the city council's master plan for Snow Hill Masterplan combined as key factors in encouraging the developer to push ahead with Three Snowhill.
"The masterplan aims to attract more investment, business and people into the city - and we are aiming to capitalise on these plans with the delivery of Three Snowhill," he added.
Originally prior to the property crash, Ballymore had planned to develop a 43-storey residential tower and a 23-storey five-star hotel as the third phase but decided instead to opt for offices which are in line with the master plan.
The city's inward investment agency, Marketing Birmingham, is not just focussing its attention on London-based corporates. It also plans to compete with Frankfurt and Zurich for global firms. Consequently the hub may also present increased competition for Dublin's financial services centre where Ballymore recently announced it is teaming up with Far Eastern developer Oxley to develop 650,000 sq ft of office space and 300 homes adjacent to the designated Central Bank of Ireland HQ on North Wall Quay in Central Dublin.
Ironically the North Wall Quay project is a neighbour to the National Conference Centre which is also in competition with another generator of business for Birmingham - its exhibition centre.
Birmingham has gained a competitive advantage over Dublin in terms of office rents during the last year.
After the property crash Birmingham rents did not fall as sharply as those in Dublin. But in the last two years Dublin rents have risen 72.74pc from their trough. In contrast Birmingham rents recovered more slowly, up 11.11 pc from trough and stood at €466 per sq m according to a CBRE Q1 2015 survey. The same survey shows the equivalent Dublin offices rents at €511.30 - a 9.7pc premium for Dublin. The CBRE survey also shows that Birmingham, despite the lower rents, offers a better return for investors as yields there stand at 5.5pc whereas those in Dublin were 4.75pc.
The city is also considered to have quite affordable Grade A office space for a major British city, and according to CBRE operational costs are as much as 55pc cheaper than London.
Already Birmingham has had some success in attracting major international financial services firms, its most recent being banking giant HSBC which is moving its ring-fenced banking operation to the city as it is forward purchasing the 210,000 sq ft, 2 Arena Central site in central Birmingham - the city's largest property deal since 2002. The city is also flagging Deutsche Bank as yet another of the major international banks to locate there.
Local media reports that young professionals are also flocking to Birmingham, with 5,480 Londoners in their thirties moving there last year - the highest of any regional city. Greater Birmingham is attracting more foreign direct investment projects than any other region, and a record number of foreign firms invested in the area in 2013 and 2014.
Ballymore has been particularly active in the UK in recent months. Apart from the Birmingham activity, the firm has been busy at work in London's east end.
It has just launched the City Island development in east of the city, a landmark development that is aimed at a mix of prospective buyers.