M42 and Solihull office market research — Q3 2019
Across seven lettings, the Solihull office market achieved a total square footage of 130,863 sq ft for the quarter. This was only c.30,000 sq ft short of the Birmingham office market total in Q3.
Despite this great quarterly total, the Solihull office market continues to cry out for office space – the drought stretches the M42 corridor. However, as commercial property developers and landowners give serious consideration to speculative development, some relief could be on the horizon.
Solihull office market at a glance
- ZF delivers largest deal since 2015 – largest since Interserve at International House
- Plenty of healthy-sized deals in Solihull office market – four other deals over 5,000 sq ft
- Speculative development now a real prospect – potential 100,000 sq ft office development
- Solihull town centre remains quiet – lack of supply leads to just a single deal in Q3
- Outlook – deals coming through despite drought
ZF delivers largest deal since Q2 2015
The largest transaction of the quarter was to global technology manufacturer, ZF. The company took a well-publicised pre-let at Plot A on Blythe Valley Park that represents 90,001 sq ft. ZF is a global leader in drive-line and chassis technology, as well as active and passive safety technology. ZF is relocating from The Green, in a move that will consolidate all of its Shirley operations into a single building.
Blythe Valley Park
In addition to the office and R&D function, ZF intends to use the new site to create a purpose-built technical centre.
Alastair McQueen, vice-president and site lead for ZF Shirley, said: “The new site at Blythe Valley Park offers us the opportunity to maintain our long-time affiliation with the Shirley area and will bring together the many facets of our existing multi-disciplinary campus under one roof.
This transaction is the largest in the M42 and Solihull office market since the pre-let to Interserve in Q2 2015. The deal of four years ago saw Interserve take 113,657 sq ft at International House.
As a result of the pre-let, Q3 also achieved the highest total office space transacted in a single quarter since Q2 2015. Achieving this in just seven transactions puts Q3’s average transaction size at an impressive 18,695 sq ft.
Plenty of healthy-sized deals in Solihull office market
The pre-let to ZF is great news for the office market. However, a further four of the seven transactions were above 5,000 sq ft:
|Size (sq ft)
|2480 The Crescent
|Birmingham Business Park
|2800 The Crescent
|Birmingham Business Park
|Veolia Water Technologies UK
The second-largest letting of the quarter, for example, was still over 10,000 sq ft, with Llamasoft taking 11,093 sq ft at Pegasus House – at a record rent. The producer of supply chain management software has relocated within Shirley from Avon House to Solihull Business Park.
The automotive software company, Vector GB, relocated within Birmingham Business Park by purchasing the freehold of 2480 The Crescent, moving out of 1320 Solihull Parkway. This acquisition has allowed Vector to expand and secure its occupancy in the area, long term.
Pegasus House, Shirley
Speculative development now a real prospect
Landowners are now taking tangible steps forward in improving the office space drought in Birmingham’s out-of-town office market.
The proposals now being considered could add over 100,000 sq ft to the available office stock. This would give businesses, who have been seeking office space for some time. a foreseeable option for occupancy.
The M42 and Solihull office market has seen such strong rates of take-up over recent years that the most appealing office space has all but dried up. As this issue has developed, we have seen landlords invest in refurbishing their properties, even bringing them up to Grade ‘A’ standard.
As soon as this kind of office space has come to market, it has been met with high levels of interest – and let within a relatively short space of time.
At this moment in time, demand has effectively created a one-in-one-out situation, where an occupier vacating a property gives another occupier a chance to take office space.
Demand for industrial space in the West Midlands is also very strong, and supply lacking. Developing industrial space has been of greater appeal because it can be built faster and much cheaper than office space. However, the yield for industrial space is also smaller. This means that a landlord requires larger office space with longer lease commitments to generate the same money.
KWB welcomes the prospect of new-build office space in Solihull and the M42 corridor. It would also like to invite any landlords considering speculative development to get in touch to discuss potential sites.
Solihull town centre remains quiet
Q3 2019 saw just one transaction in Solihull town centre, a letting of 959 sq ft at The Courtyard to aluminium casting technology specialists, MQP.
We have seen a slow but sure reduction in the frequency of office lettings in Solihull town centre over recent quarters. This has been driven by the developing drought of office space in this area within Birmingham’s out-of-town office market.
Lack of office space in Solihull town centre is due to both take-up and the conversion of office buildings to residential space. There are a few proposed projects for Solihull town centre that would deliver much-needed office space, although there is not yet one which is guaranteed.
The Courtyard, Solihull town centre
Currently, the lack of stock is holding back the frequency of transactions across the Birmingham out-of-town office market.
Whilst we aren’t expecting to see any deals along the same lines as ZF in Q4, we should see around 20-25,000 sq ft secured on Birmingham Business Park.
This quarter saw no transactions take place in Bromsgrove and Redditch. Thirst for office space in these two key spots on the M42 corridor has gone largely unquenched in recent years, as there’s been a total lack of high-quality office space available. However, we understand that there are upcoming transactions in Bromsgrove and Redditch totalling some 15,000 sq ft. When high quality office space is brought to the market, it is met with great interest.
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 email@example.com.