M42 and Solihull office market research — Quarter 3 2021

In Q3 2021, the Solihull office market secured 132,964 sq ft – more than double the total office space transacted in the first six months – as anticipated larger deals came to fruition.

The fortunes of the Solihull office market shifted significantly this quarter, with the fulfilment of latent demand. Transactions that had been in the offing for a while were finally realised, the largest of which saw Mitie relocate out of Interserve’s Ingenuity House.

Solihull office market at a glance

• Key transactions – Q3 sees eight deals over 5,000 sq ft
• T2’s mighty letting to Mitie – Mitie team relocates from Ingenuity House
• Chadwick picks up MSO’s serviced offering – serviced offices continue despite MSO demise
• Birmingham Business Park scores four – over 27,000 sq ft let on the Park
• Coleshill – a popular affordable option – features the quarter’s 4^th largest deal
• Redditch secures two, but Bromsgrove quiet – Redditch secures just over 7,000 sq ft
• Outlook – what lies ahead for the Solihull office market

Key transactions

T2’s mighty letting to Mitie

The largest letting of the quarter was Mitie’s lease at T2 on Trinity Park for the entire building, 32,848 sq ft. The transaction is the largest of the year so far, and second only to Lounge Underwear’s 53,882 sq ft last year on Blythe Valley Park. The size of this letting within the 2021 figures is also well demonstrated by comparing the total space transacted in the first and second quarters of this year – 20,326 sq ft and 39,970 sq ft respectively.

Located adjacent to Birmingham Airport and International Station, T2 provides Mitie with Grade ‘A’, self-contained headquarters offices for a team that was formerly an Interserve facilities management operation. Mitie purchased this arm of Interserve when the contracting business went into administration in 2019.

This operation is relocating from Ingenuity House, which was built by – and for – Interserve as a flagship example of what an office building could be. Ingenuity features an innovative, forward-thinking design built around sustainability and wellbeing, with an office specification well above that of any new buildings being constructed in the wider region.

Mitie’s move enables Ingenuity House, which will now be vacant, to offer the largest, highest quality office space in the out-of-town market – providing 114,635 sq ft over four floors to a significant incoming occupier.

Chadwick picks up MSO’s serviced offering

The third largest transaction of the quarter was the letting of 14,952 sq ft at Radcliffe House, Blenheim Court in Solihull town centre taken by Chadwick Business Centres. This space had been previously occupied by serviced office operator, MSO Workspace, which subsequently went into administration.

The serviced offices at Radcliffe House are part-occupied, with Chadwick Business Centres effectively taking on the operation and allowing the occupiers to continue within the space.

Chadwick has signed a three-year management agreement for two suites in Radcliffe House of 4,700 sq ft each, with a back-to-back occupier already agreed. Chadwick has also taken a 5,200 sq ft suite in the same building under a 10-year management agreement, with several sub-tenants lined up to occupy the space.

Dominic Moore, Head of ESG and Asset Management at Clearbell Capital, who owns the development, said:

“In line with cities across the UK, we’re seeing a resurgence of business appetite for office space in Solihull as COVID-19 restrictions lift. There is growing demand for physical office space that meets employers’ needs, including space for collaboration with colleagues that we’ve all missed whilst working from home.

“Grade ‘A’ offices with modern amenities on flexible lease terms are in high demand, especially in strong business centres such as Solihull and the surrounding M42 area.”

Birmingham Business Park scores four

Birmingham Business Park has historically dominated transactions in the Solihull office market, primarily due to the size and quality of the office space it comprises. The Park offers a superb location close to the M42, Birmingham International Station and Birmingham Airport, as well as an impressive business community.

This quarter, Birmingham Business Park secured four lettings totalling 27,189 sq ft – 20% of the quarter’s overall take-up. Three of the transactions took place at the Park Square development and represented relocations within the Park.

Birmingham Business Park continues to secure large office space transactions, although stock on the Park has become very low, around 4%, due to several years of high take-up.

Coleshill – a popular affordable option

This quarter saw three transactions in Coleshill totalling 18,778 – 14% of total take-up – including Q3’s fourth largest deal, a letting of 10,201 sq ft at Bromwich Court to Lasercare Clinics.

As occupiers search for available, high quality office space close to the M42, locations such as Coleshill have become increasingly popular – we saw four lettings in this area in Q2 as well. An area such as Coleshill also offers excellent value for money compared with, for example, Solihull town centre or one of the major business parks nearby. In some cases, office space in these locations might be as much as 40% less per sq ft. Landlords with properties in these areas should consider how they compete with space available in Solihull, as some occupiers may be tempted by their offer.

Redditch secures two, but Bromsgrove quiet

In Q2, both Redditch and Bromsgrove, which are historically important locations in Birmingham’s out-of-town office market, secured three transactions. Prior to that, we regularly saw quarters with no activity in these locations, due to the lack of available office stock. This quarter, Redditch alone saw transactions totalling 7,019 sq ft.

International civil engineering business, Stantec, took nearly 6,000 sq ft in Redditch, at Ravens Court, 1 Hedera Road on Ravensbank Business Park, in a relocation that will see them occupy much higher quality office space. Stantec, with their expertise in design, consulting and material handling systems, has seen significant growth in requirements for their services, undoubtedly accelerated by the recent growth in e-commerce and delivery.

The property, which is 10,000 sq ft in total, recently underwent a comprehensive refurbishment to Grade ‘A’ specification, which was carried out by interior design and fit-out consultants, KWB Workplace. The semi-detached office building has a welcoming refreshed reception, the latest daylight-sensing LED lighting, VRV air conditioning, a landscaped entrance and generous parking allocation of 50 spaces.

Outlook for the Solihull office market

Q3 has been an impressive return to form for the M42 office market. The latent demand has now resulted in lettings, as occupiers have a clearer idea of their direction in terms of working arrangements.

Q4 is likely to be less active – the larger lettings that were secured this quarter had been known about for quite a while. That being said, we would still expect a respectable finish to the year and a good total for the year as a whole. The Solihull office market is well-known for its resilience, owing in no small part to the mix of businesses the M42 corridor attracts, including TMT, property, construction, engineering and many others.

Businesses are encouraging their teams back into the office, and September was an important month for many occupiers in this respect. There have been a variety of publicised incentives that employers are using to tempt workers back, from improving the working environment with higher quality offices and new breakout areas, to cash bonuses and even free ice cream!

As great as free ice cream sounds, there are important notes that the property market can take from what is happening here. Firstly, quality is now paramount for many occupiers and, secondly, as more teams return to workspace, the more enquiries we can expect to see. Opportunities are coming.

There is demand for a variety of sizes of office space, demonstrated by the broad mix of sizes we can see in this quarter. Strength of demand and lack of supply is underlined by examples such as the high number of enquiries received for the self-contained 4,295 sq ft Joseph House office building in Shirley, which has now been let to an undisclosed occupier.

If you are a landlord that can cater for such a size, or another size bracket for which there is demand, now is a good time to consider the positioning of your property and the quality of your office space. For more information regarding popular office size brackets in the M42 and Solihull office market, read our ‘Solihull and M42 office market insights for 2021’.

See full details of the transactions featured in our M42 and Solihull office market research.

For more information, please contact Malcolm Jones on 0121 233 2330 or email mjones@kwboffice.com.

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