M42 and Solihull office market review Q2 2024

M42/Solihull office market Q2 2024 key transactions

The M42 and Solihull office market Q2 2024 saw a spike in deals after an underwhelming start to the year. With 75,140 sq ft of office deals completed across eight transactions, Q2 brought figures above both the 5- and 10-year averages.

Top performing sectors in the quarter

Three of the eight deals in the M42 and Solihull office market Q2 2024 came from professional services and three from TMT (technology, media and telecoms). While the manufacturing sector only completed one deal in Q2 (ABP Food Group), it was the biggest transaction. Aspris Fostering Services represents the care sector for the remaining office letting this quarter, completed in Bromsgrove.

The professional services sector typically performs well in the M42 and Solihull office market. However, the uptake has increased in the first six months of 2024, representing 30% of take-up and 35% of deals. Details on these transactions are covered in more detail below. While we are only at the halfway point of the year, the growth in this sector looks promising. In 2023, it represented 21% of office take-up and in 2022, just 10%.

At the end of H1, the proportion of square footage let to the TMT sector also showed a notable increase, currently representing 30% of the overall take-up, compared to only 8% across the entirety of 2023 and 23% in 2022.

Smaller office deals still dominate

While smaller office suites of up to 5,000 sq ft represented the biggest proportion of deals in H1 2024 at 47%, medium to large office space is increasing.

Over recent years, office lettings up to 5,000 sq ft have dominated the M42 and Solihull office market, taking 82% of the deals in 2023, 70% in 2022 and 63% in 2021. However, the drop to 47% seen in the first half of this year is viewed as positive as it can be attributed to a strengthening medium to large office market. This market section has taken 29% of the deals across the 5,001 to 10,000 sq ft bracket and 18% in the 10,001 to 20,000 sq ft band in H1 2024. The percentage of deals for these sized offices were 9% and 6% respectively across the whole of 2023.

Vienna House acquisition tops the quarter

ABP Food Group, one of Europe’s leading producers of quality beef products, is making Vienna House at Birmingham International Park its more permanent home. Previously leasing office space close by, the food manufacturer decided to purchase 25,412 sq ft of freehold space at this newly refurbished office building adjacent to Birmingham Airport.

Birmingham Park is situated just two miles northwest of Junction 6 of the M42, with Birmingham International Railway Station and the future HS2 Solihull Interchange Terminal also nearby. For ABP Food Group, this outstanding connectivity is ideal for their supply and logistic operations.

Having undergone a recent office refurbishment, Vienna House offers many of the specifications sought after by contemporary businesses. It’s a smart-enabled building with EPC A, a silver WiredScore rating and an AirRated Gold accreditation. It also offers 113 car spaces, fast-charging EV charging points, a cycle hub with showers and changing facilities and a private landscaped area.

Ingenuity House completes further deals

Following the deal with Orega serviced offices provider in Q3 2023 for 30,633 sq ft, the five-storey, 114,635 sq ft office building Ingenuity House is filling up with two further deals this quarter totalling just over 17,500 sq ft. Financial services provider Allianz Insurance takes 10,139 sq ft of office space, while e-commerce platform provider Flooid completes a deal for 7,382 sq ft.

Ingenuity House, which was formerly constructed and occupied by Interserve, is located next to Birmingham Airport and International Railway Station. The NEC, Resorts World and the future HS2 Station are also within easy reach. For national and international businesses such as Allianz and Flooid, this accessibility is invaluable.

Purpose-built for forward-thinking companies, Ingenuity House has been designed to support sustainability and offer office environments that enable flexibility, communication and collaboration. In addition to its WiredScore gold-rated office space, it provides eight training areas, 76 breakout spaces and meeting rooms with wireless presentation capabilities.

Plans for Mell Square unveiled

Following our announcement last quarter of a programme of public engagement, plans for Mell Square in Solihull have been unveiled, indicating a promising outlook for the town centre of this metropolitan borough. Developer Muse, in partnership with Solihull Metropolitan Borough Council, has revealed that the redevelopment project aiming to regenerate the town centre will include developing smaller, bespoke public spaces, leisure facilities and new homes. The plans come after an evaluation of the needs of the local community, and seek to support the creation of more jobs and training opportunities, as well as more options for leisure time and nightlife.

Solihull is already regarded as a thriving and attractive destination for businesses and residents in the Midlands. A recent report by Solihull Metropolitan Borough Council showed the town to be one of the strongest-performing economies in the UK. It revealed that Solihull outperforms the rest of the West Midlands and the UK average in terms of Gross Value Added and business survival rates. Solihull Council’s narrative recognises its strength in sectors such as manufacturing, transportation systems, professional services and ICT sectors. It also identifies the development area known as UK Central (UKC) Solihull, which includes sites in and around Birmingham Airport, the National Exhibition Centre (NEC), Birmingham Business Park, Birmingham International Railway Station and Jaguar Land Rover (JLR), as one of the country’s most strategically important development areas.

The newly refurbished office building AIR has seen success in the centre of Solihull, completing a deal for just over 11,000 sq ft of office space with recruitment services provider Robert Half last quarter. With the redevelopment of Mell Square, as well as the planned new 120,000 sq ft office building Westgate, enhancing the town centre, Solihull is expected to go from strength to strength.

A new office destination in Solihull

Following the successful renovation of AIR, Solihull on Homer Road, all eyes are on Westgate as the next flagship office building in the town centre. Solihull Metropolitan Borough Council bills it as a landmark building on a prominent gateway for the updated business and commercial quarter. Meanwhile, KWB believes that Westgate can follow in the footsteps of AIR, attracting businesses to the town by providing an office destination with contemporary amenities and excellent connections. Complementing the redevelopment of Mell Square, Westgate will add to the attractiveness of Solihull town centre as a business hub.

The status of the building, in terms of start or completion date, is yet to be confirmed. However, as Solihull’s only purpose-built Grade A office development, enquiries on the available space have already begun. Designed with sustainability and flexibility in mind, Westgate has low carbon credentials and smart floorplates of up to 18,000 sq ft. With co-working and collaboration space, a ground-floor coffee shop and a signature reception area, it meets the needs of today’s forward-thinking businesses whose ESG goals sit alongside their priorities of functionality and convenience.

Professional services and TMT prosper

In H1, 30% of take-up in the M42 and Solihull office market went to the professional services sector and 30% to the TMT (technology, media, and telecoms) sector. These strong results are replicated in the number of deals completed, with six transactions for professional services and five for TMT.

In 2023 and 2022, professional services took 28,205 sq ft and 22,160 sq ft of office space, respectively. With 33,956 sq ft confirmed in only the first six months of 2024, this sector is showing significant growth. This quarter’s three deals came from Allianz (10,139 sq ft), M Group Services (5,659 sq ft) and Mucklow and Harris (1,227 sq ft).

The TMT sector has seen a considerable bounce back in take-up in the M42 and Solihull office market. In 2023, it closed only 8% of the office deals comprising 11,331 sq ft. At just the halfway point this year, 34,339 sq ft has already been let to the TMT sector, constituting 30% of the market.

A key deal for the TMT sector in the M42 and Solihull office market Q2 2024 was from global IT services provider, Fujitsu. It secured 17,631 sq ft of Grade A office space at Blake House at Junction 6 of the M42.

Progress on HS2 continues in the region

Work continues on HS2, with giant concrete beams installed on a rail bridge structure in nearby Kenilworth, Warwickshire. This step involved positioning 83 beams weighing 1,500 tonnes to form a bridge that will take the high-speed railway over the existing West Coast Main Line.

Earlier this quarter, the design of a new car park at the Interchange Station near Solihull was approved. The plans included the facility’s access, landscaping and layout. The installation of EV charging points, car park canopies, external seating and CCTV will form part of future plans for which approval will be sought.

HS2 will provide a substantial boost for businesses in the region around the M42 and Solihull. The Interchange Station will be the first stop for high-speed trains out of London, reducing journey times to under 40 minutes. Not only will this connection provide unrivalled connectivity to the capital for businesses in the region, but it will also enhance accessibility to international markets. It puts the areas around Solihull, known as UK Central (UKC), in a prime position for investment, attracting businesses seeking regional hubs outside of London but still within easy reach.

According to the recent narrative released by Solihull Metropolitan Borough Council, HS2 could create an economic uplift of £10 billion over the next ten years.

J6 M42 area remains dominant

The business development area around J6 of the M42, which includes Birmingham Airport, Birmingham Business Park, Coleshill and parts of Solihull, remained the strongest during H1 2024. It accounted for 59% (10) of the deals, up somewhat from 2023, when it took 55% across the whole year.

Despite the dominance of the J6 M42 area, the business development zone around J4 of the M42 also showed growth in the first six months of this year. It went from taking an 18% share of deals in 2023 to 29% during H1 of 2024. With five deals completed for this zone this year already, it is only one behind the six across the whole of 2023.

The most significant transaction in the J4 M42 area in H1 was from Wireless Infrastructure Group (Field & Towers). This independent wireless infrastructure operator took 6,057 sq ft at Rhodium, Blythe Valley Business Park.

Outlook for M42 and Solihull office market

With Q2 exceeding 5- and 10-year averages, 2024 is poised to be a strong year for the M42 and Solihull office market. Investment in key development and infrastructure projects, such as Mell Square and HS2, are increasing the draw to Solihull and its surrounding areas, which are already considered attractive places to reside and do business. A few key deals are still on the horizon and expected to close before the year’s end, which should result in a similarly high-performing H2.

However, Westgate has yet to start construction, and space in other key office buildings is becoming limited. Therefore, if businesses want to maximise the opportunities the areas around Solihull offer, they must act quickly to secure the higher-quality, larger square footage in this strategically important region of the UK.

The M42 and Solihull office market caters to a different target sector from that of Birmingham’s city centre. So, despite the enticing opportunities for premium city centre space, the M42 and Solihull office market is not losing out. As out-of-city office buildings, these sites appeal to businesses where road travel is a significant part of their operations. Good parking facilities and proximity to the M42 mean employees, suppliers and clients can come and go with ease. Moreover, these business parks are becoming thriving hubs themselves, with many offering cafés and bars, as well as retail and leisure opportunities on-site or nearby. For landlords to remain competitive, it’s critical to recognise these different priorities between business types and ensure their developments are aligned with them.