KWB’s latest transactions research for offices in Solihull and the M42 corridor shows that it has achieved over 50% of the office space deals in the first quarter of 2015, which was dominated by expansion lettings. A large pipeline of significant enquiries also signifies that Q2 is likely to be a bumper quarter for Birmingham’s out-of-town office market.
KWB achieved 14,640 sq ft of the 28,602 sq ft of office space in Solihull and the M42 corridor transacted in Q1, across 6 of the 11 deals that took place.
KWB’s Mark Robinson said: “Birmingham Business Park forms a considerable part of our success in recent times within Birmingham’s out of town office market.
“With increased demand across the board and larger office space requirements in the market, supply in the area is beginning to appear quite limited. Birmingham Business Park remains one of the few places in the area that can facilitate expansions, consolidations and large relocations, whilst still providing high quality office space in Solihull.”
With the number of office viewings conducted during Q1, and several deals that should have completed within the quarter but will have pushed into Q2, KWB can foresee not only a bumper Q2 but also a pipeline of significant enquiries for office space that will need housing within the area later this year.
Office schemes with availability will prosper this year as the supply of office space tightens, pressure increases from landlords to reduce incentives, and quoting rents start to increase where buildings have been refurbished.
Research highlights for offices in Solihull and the M42 corridor
- Expansion of office space today will drive consolidation of offices in the future – A considerable proportion of occupiers in Q1 were taking additional office space, expanding to accommodate new staff. Expansions included the largest deal of the quarter, Entrepreneurs Circle, doubling their office space at 2635 Kings Court on Birmingham Business Park, by taking an additional 5,671 sq ft. Other occupiers included financial advisers, Ernest Grant, Secure Trust Bank, UK Power Reserve and VINCI Construction. If SMEs continue to perform well and staff up with medium term expansions, we anticipate they will look to consolidate in the longer term into larger buildings or single floors.
- Longevity of M&E systems a hot topic with larger occupiers – Larger occupiers who are seeking office space in Solihull and the M42 corridor are becoming more concerned regarding the longevity of M&E systems, demanding that it matches the length of lease that they are signing. As a result, refurbishment in this area will set landlords above the competition.
- All is quiet in Bromsgrove and Redditch – but demand is not to blame – Outside of the immediate Solihull area, the only deal signed in Q1 was 4,545 sq ft taken by DRB Facilities Management at 5 The Courtyard offices in Bromsgrove. Lack of office space being taken up in Redditch and Bromsgrove this quarter is more attributable to the shortage of office space available in these areas, or at least that of a decent quality. This follows on from our highlighting of demand for both new offices and the refurbishment of secondary office space in these areas.
Research highlights for offices in Birmingham and Edgbaston
- HSBC signing is first of a number of significant office lettings in Birmingham – HSBC’s much publicised 210,000 sq ft of new build office space at Arena Central has been signed, although not yet reflected in this quarter’s figures. This announcement is huge news for Birmingham and represents a relocation from central London, which won’t be the last. We expect a number of other significant deals of almost the same magnitude to be announced shortly, as well as news of signed pre-lettings during the course of this year for the schemes at 3 Snow Hill and Paradise.
- Increased activity levels drive recruitment and expansion of office space– Similar to Solihull and the M42 corridor, a good number of the deals this quarter are occupiers taking additional office space as they expand to accommodate new staff. These deals included Michael Page recruitment specialists expanding their offices in Brindleyplace by a further 15,960 sq ft at no. 4. This trend of incremental expansions is one we’ve seen emerge right across the greater Birmingham office market.
- Recruitment companies are the winners – Understandably, it is the recruitment-related companies who are dominating the transaction statistics this quarter – 28% of deals and 24% of square footage. Michael Page was by far the largest of these recruitment sector deals, with the aforementioned doubling of their space to nearly 32,000 sq ft.
- Refurbishment of office space brings lettings – In Q1, we see investment in office space refurbishment paying off in Birmingham. KWB has seen this at first hand with their recent lettings at Lancaster House, completed within just 4 months of the refurbishment – Bell Cornwall Recruitment, 2,300 sq ft, and CWA civil engineers, 3,300 sq ft. Elsewhere, Enterprise House has seen three lettings totalling 8,495 sq ft, after property company Hortons’ Estate carried out a good refurbishment, which was well received in the market.
- Rise of interest in Edgbaston as it takes two of the top three deals – The sizeable transactions include 19,656 sq ft at Neville House, 9,584 sq ft to BMG Research at Greenfield Crescent and 5,359 sq ft at 54 Hagley Road. Furthermore, next quarter will see the announcement of another large transaction for office space in Edgbaston.
For more information, please contact Mark Robinson on 0121 212 5994 or email firstname.lastname@example.org.