Following their achievements in the out-of-town office market this quarter, KWB foresees the availability of larger office space in Solihull and the M42 corridor drying up soon!
KWB’s Mark Robinson takes a detailed look into the Quarter 2 office space transactions, examining the individual deals and puts the findings into context. Here’s the most informative commentary of the activity in the office space market in Birmingham, Solihull and the M42 corridor, this quarter.
Research highlights for offices in Solihull and the M42 corridor
KWB achieves a dominant share of Solihull’s office space lettings: KWB was responsible for 64% by square footage of the office space deals in Q2 2014, the largest quarter for office space transactions in Solihull for two years. The commercial property agency’s deals totalled 86,000 sq ft for Q2, and they signed 3 out of the 4 largest transactions in the quarter, comprising UTC, Steria andeTech.
KWB’s share of the out-of-town Solihull office market has been consistent in the first half of 2014, with a 62% majority share of the lettings, totalling 120,000 sq ft.
Double lettings at FORE see phase 1 of the business park 85% let: with aerospace giant, UTC, taking the whole of FORE 1, 25,749 sq ft, and software provider eTech, also signing a 10 year lease on the whole of the first floor within FORE 2, comprising 10,484 sq ft, only one floor – which is also attracting strong interest – now remains available to let at this highly successful office scheme.
IM Properties purchases FORE: this quarter has seen the sale of FORE Business Park by BAM Properties to Coleshill’s IM Properties for £21m. IM purchased both the two existing buildings and the development land which has detailed planning consent for a further 2 buildings. KWB has been retained by IM Properties to market the final floor within Fore 2 and to review the design and viability of the second phase.
FORE has been a popular choice for high quality office space, being the only BREEAM ‘Excellent’ offices in Solihull and also, notably, the last speculatively developed office scheme to be completed in the M42 office market.
Birmingham Business Park experiences resurgence in popularity: a total of six transactions have taken place over the past quarter at Birmingham Business Park, with lettings amounting to 45,000 sq ft of office space. The largest of these six lettings was Pinewood Technology’s relocation to Trident Court, who acquired 22,174 sq ft.
These new occupancies confirm predictions that this year would see a significant reduction in office oversupply at the park.
Solihull continues to prosper: with ever-growing demand for office space in Solihull, it’s not surprising that the borough currently has the fifth highest GDP in the country. Solihull’s high street has also enjoyed record low levels of retail property vacancy, throughout the recession with footfall remaining high.
Larger office space drought predicted for Solihull: with the three biggest lettings for the area in this quarter totalling over 65,000 sq ft, it’s becoming increasingly apparent that availability for larger office space in Solihull is drying up. This is likely to stimulate demand for new developments to meet office space demands, as well as an increase in landlords negotiating position when negotiating terms.
Redditch and Bromsgrove prove that demand in Birmingham’s out-of-town office market will surpass supply: with such developments as Bromsgrove’s Topaz now about to be declared “fully let”, the immense popularity for out-of-town office space has decimated availability. This demand is due, in part, to such factors as the proximity of offices to Birmingham city itself, the affordability of out-of-town offices and excellent motorway connections.
Research highlights for offices in Birmingham and Edgbaston
- Promising trends indicated by smaller lettings, in a fairly unremarkable quarter for Birmingham’s office space market.
- Growth in office space take-up by the education, recruitment and financial sectors shows increasing confidence in the city and its talent pool.
- Whilst predictions for investment in larger properties, within the city, appear to be confirmed, by the massive signing of 100,000 sq ft by HS2 at Two Snowhill at the very start of quarter 3.
Higher education is booming: BCU is in fantastic shape as it continues to expand, taking up almost 35,000 sq ft of office space in quarter 2. The largest transaction Birmingham City University has undertaken in the second quarter is taking over 27,000 sq ft in the New Technology Institute, or NTI building, creating a centre for a digital postgraduate department.
CBRE takes up hot property: the commercial property agent’s relocation to 55 Temple Row, although only amounting to 13,500 sq ft, is the largest corporate office space undertaking in the quarter. CBRE has moved from Cornwall Court into one of the most high profile office buildings in the market. Once their new property’s refurbishment is complete, the office move is expected to boost their business in the future.
Finance and recruitment continue to grow: the continuation of office space being taken up by financial and recruitment companies in Birmingham’s city centre paints a promising picture of economic confidence in the area and its future.
Healthy activity in the market for small and medium sized offices signals a trend of investment in office space that larger companies are expected to replicate: with so many smaller office transactions taking place in Birmingham, a trend for property investment in the city is expected to develop. Evidence of this forecasted investment will be slower to come to fruition, due to the larger corporates now taking longer to consider their relocation opportunities and extended due diligence.
HS2’s HQ relocation may confirm Birmingham office market predictions:With Q3 kicking off with the announcement of the high speed rail company signing a 15 year lease of 100,000 sq ft of office space at Two Snowhill, this could be the first of a number of larger transactions to come. The signing also puts Birmingham on the right track to meet, and perhaps surpass, annual targets in the commercial property sector. The impact of this will be a developing story over the coming quarters, and there’ll be more to say about the signing and initial implications at the end of Q3.
For more information, please contact Mark Robinson on 0121 212 5994 or firstname.lastname@example.org.