Interview: Oval Real Estate on being different in Digbeth

Oval Real Estate is about to embark on its biggest development yet. But having secured planning permission for 1,850 homes and 2.2m sq ft of commercial space, its founders are in no great hurry to get shovels in the ground. So much so that the next steps of development will focus on upgrading existing buildings outside the 4.3m sq ft consent. Traditionally known for London office investment, Oval is somewhat sticking to its roots as it begins to unlock 42 acres in Digbeth. It will begin this mammoth task with the refurbishment of six buildings on Floodgate Street to provide 150,000 sq ft of office space. Having physically cleaned the street, Oval is now in advanced negotiations with prospective tenants in TV, media and the education sector to prelet the space. These creative industries build on a trend of occupiers including BIMM music college, Maverick TV and North One Television. “Our ownership is a running investment. The pressure to develop is not as upfront as it might be with people who simply bought a piece of land – we have income,” says Oval co-founder James Craig. “It’s not like a typical development site where you have a consent on an empty piece of land – this is a living, breathing estate. Our element has more than 98 buildings and 600 tenants, and the nature of our consent allows us over time to choose the point at which we pick off a development.” Custard splash Initially lured to the area by the promise of the High Speed 2 station at Curzon Street, Oval has spent the past four years piecing together that majority holding. It started in 2017, with a £6.7m land purchase of the iconic Bird’s Custard Factory (pictured) from owner Lucan Gray. Soon after, it added Fazeley Studios for £14.1m, warehouses on Heath Mill Lane for £6.5m and a trio of sites on Floodgate Street for £3.9m, according to EG Radius and HM Land Registry. In 2019, the venture secured backing from the Laxfield LLP fund, owned by CBRE GI, and in April brought on former Laxfield investment director Rikki Lewis. Over the years, Oval has grown its ownership to around 1m sq ft of commercial space spanning 20 acres. Most recently it added the long leasehold for Isambard Kingdom Brunel’s Duddeston Viaduct, to use the land as a sky park for public events. The developer is advancing options and agreements with other landlords over a large part of the remainder, and is also working with landowners including Homes England and the Gooch Estate. It’s not like a typical development site where you have a consent on an empty piece of land – this is a living, breathing estate James Craig, Oval Real Estate Reactivating old Digbeth Craig says Oval is different from the raft of developers with subject-to-planning options in Digbeth. “We took a step forward here and bought the land, and then worked with Birmingham City Council to build this hybrid application,” he says. “We’re in a unique position.” Indeed, securing an outline consent in a conservation area is a rare feat. Co-founder Nick Prior adds: “We were not buying into it in 2017 expecting to make it work immediately. You have to slowly pull it through. It was definitely a longer-term project, whereas historically we have done shorter-term ones. This was a definite veer away from what we were used to.” That veer includes scooping up a 90-strong events business to run projects on the site. “We felt it was important to control what was happening on the estate. If we didn’t have it then somebody else was going to do it, and they could have done it wrong,” adds Prior. “It is an important part of our reactivation of the whole scheme. We put on music festivals, gin, beer and coffee festivals, corporate events and weddings galore.” Reactivation is a phrase that comes up a lot. After Floodgate Street, next up is the former industrial factory at the Bond Company, with refurbishment backed by a £3m LEP grant. “That will be a dedicated media and TV hub, with recording studios for commissioning and broadcasting,” says Craig. This pathway of new activity will cut through derelict land, joining the Custard Factory to the southern entrance of HS2. Low-rise living Craig says Oval will start funding the £1bn development itself, and aims to work with a variety of tenants and investors with a combination of speculative and prelet development. “We are going to decide, over the next few months, which project in this masterplan we will take on first.” Behind the Custard Factory, Oval has secured detailed consent for 40 flats at Custard Factory Living, 140,000 sq ft of offices at the Wild Works plot and a three-storey extension on top of the Custard Factory to provide 35,000 sq ft of extra office space. Across the wider outline consent, there is a focus on employment space and education, but also a hotel, leisure premises, student accommodation (700-750 beds) and PRS within the residential. When it comes to unpicking those 1,850 homes, Prior says: “We are trying to differentiate ourselves from all the residential that is going on around as well. There are lots of towers being consented in Birmingham that may or may not get built.” Excitement around HS2 has seen towers as tall as 51 storeys in Digbeth and Eastside, where Oval maxes out at 14 storeys on the edge of the conservation area. Craig adds: “In truth, we just want to watch what works and what doesn’t. The timing of this sits with us.” To send feedback, e-mail emma.rosser@eg.co.uk or tweet @EmmaARosser or @EGPropertyNews Photo © Oval Real Estate