Office pipeline on M42 corridor set to run dry warns KWB
With offices in Solihull drying up, KWB’s Birmingham commercial property agents are making the call to developers that they must deliver speculative office space along the M42 corridor, or prospective tenants will look elsewhere.
Malcolm Jones, Director of Office Agency at KWB, says that the market for offices in Solihull and the M42 corridor is in danger of becoming a victim of its own success.
Malcolm says: “I’ve been working in the Solihull office market for almost 25 years and, in that time, the pipeline of office space has never been this close to empty.”
“The area’s largest employment location is Birmingham Business Park (BBP), but it’s so popular that its vacancy rate is down to just 6.8%. With several deals about to complete, the Park is not far off being fully occupied.
“At the moment, there are no office schemes coming forward on a speculative basis at other sites along the M42. The drought is fast becoming a major strategic issue for the regional economy. If potential occupiers can’t find space here, they might well choose to go elsewhere – or otherwise suffer a stunt to their own growth.
“I think commercial property developers who believe in the long-term merits of the market for offices in Solihull and the M42 corridor could justifiably deliver a scheme of 80,000 sq ft on 20,000 sq ft floor-plates. They’d be rewarded promptly, as it would be snapped up as an HQ-style building, or they could bring forward smaller units, which would be equally as popular.”
Malcolm says the warning signs have been flashing for the last 18 months, due to sustained high demand for Grade ‘A’ office space combined with dwindling availability of space to drive up rents.
The first quarter of 2019 saw the trend of take-up continue in the office market across the Solihull-M42 area. With 14 deals completed, it was the best quarter for almost four years, but taking another 120,000 sq ft out of the pipeline.
Malcolm continues: “If there was a new-build scheme of offices in Solihull or the surrounding area today, it could command rents in the mid-to-late £20s, a level that would have been associated with office space in Birmingham city centre not so long ago.”
Birmingham Business Park
Birmingham Business Park contains 1.9m sq ft of space, and its long-term success as an economic magnet can be seen in the presence of 120 tenants, including such global brands as BT, EE, Fujitsu, Goodyear Dunlop Tyres, IMI, Nokia Siemens Networks, and Rolls Royce – and combined employment numbers of c.7,000.
However, Malcolm says that even a ‘well’ of this size is now finally running dry, with two further deals reducing the level of available office stock to a new all-time low.
“The British Heart Foundation has taken 10,000 sq ft at Compton House (pictured here), on the Crescent, and another new occupier to the area has taken more than 13,000 sq ft in the adjacent building.
“I’m not pessimistic, because the Park’s concept of delivering Grade ‘A’ office space with a wide range of amenities, in a landscaped country park setting, is proven – and it’s since been adopted by IM Properties at Blythe Valley Park – so the attraction of the M42 corridor is evident to all.
“However, I really hope that over the summer, we’ll see one or two developers look to gain an advantage over their peers in this very competitive market, by revealing plans for speculative office space.”
KWB is one of the most active office agents in Solihull and the M42 corridor. Each quarter, we produce comprehensive M42 and Solihull Office Market Research, listing all the office transactions and providing our view of the current and future market. See further details about the current research for 2018 full year and latest Q1 2019. See also full details of the transactions featured in the M42 and Solihull office market research for 2018 and 2019 to date.
For more information on offices in Solihull, contact Malcolm Jones on 0121 233 2330 or email mjones@kwboffice.com.
