The M42 and Solihull office market secured 35 transactions totalling 163,901 sq ft – 51% of its long-term average. However, it’s also worth noting the lack of available office stock. This has had a significant impact on this market in recent years and continues to constrain it.
2020 was such a challenging year for regional, national and global office markets. As such, it’s not overly surprising that the M42 and Solihull office market secured just three transactions over 10,000 sq ft.
| Office building | Size (sq ft) | Location | Occupier |
|---|---|---|---|
| 1 Blythe Gate | 53,882 | Blythe Valley Park | Lounge Underwear |
| 6210 Bishops Court | 11,602 | Birmingham Business Park | Colas |
| Cogen Court | 11,219 | Shirley, Solihull | MV Kelly |
The market was greatly supported this quarter by a single transaction. The letting of 53,882 sq ft to Lounge Underwear at 1 Blythe Gate represents 33% of the square footage secured by Birmingham’s out-of-town office market in 2020.
The letting to Colas of 11,602 sq ft at 6210 Bishops Court on Birmingham Business Park was the second largest transaction of the year. The civil engineering contractor took the space to consolidate some of its operations. As a result, by bringing its teams together, Colas benefits from better collaboration and increased efficiencies. Colas is no stranger to Solihull either. It delivered the £55m runway extension at Birmingham Airport and A45 ancillary works back in 2015.
The third transaction over 10,000 sq ft was the purchase right at the start of 2020 of Cogen Court on Cranmore Boulevard. The offices are set in the established Cranmore area of Shirley, Solihull, Junction 4 of the M42. Groundworks specialist, MV Kelly, purchased the building, which was marketed as a refurbishment opportunity, and relocated its staff from its former head office in Tyseley.
In Late December, athletic underwear brand, Lounge Underwear secured its lease of 53,882 sq ft at 1 Blythe Gate on Blythe Valley Park at Junction 4 of the M42.
Founded only in 2016, Lounge Underwear has gone from “a young couple’s dream in their Stourbridge living room” to a multi-million-pound global company.
In 2019, founders Dan Marsden and Melanie Paradise – who now live locally in Alvechurch – relocated the business and its 27 staff to Solihull. Lounge Underwear moved from 7,000 sq ft of space in Bromsgrove to a 36,741 sq ft warehouse unit, Connexion on Blythe Valley Park. In that same year, the business had a turnover of £5.8 million, with plans to double its size in the next 12 months.
The drivers for moving to Blythe Valley Park were “about future-proofing the business, creating room for its ambitious growth plans and being in a location able to attract the best people to join the Lounge family”.
The now Solihull-based company only sells through its website directly to customers around the world. Lounge’s marketing strategy involves using social media influencers in target overseas territories to help promote their products. Interestingly, this has helped to grow sales by an average of 162.2% over the last three years, to £13.8m for the year to March 2020. Since the coronavirus pandemic began, the increase in sales of Lounge’s products has risen further still. In 2020, its year-on-year sales tripled, leading it to recruit 30 additional staff.
Lounge Underwear is understood to be keeping its Connexion warehouse as it splits its HQ and distribution facility. By opening its c. 54,000 sq ft office HQ – bringing its total Blythe Valley Park commitment to around 90,000 sq ft.
This growth in space marks a meteoric rise for this new breed of clothing retailer – or ‘e-tailer’. A rise that is akin to fellow Blythe Valley occupier and activewear brand, Gymshark.
With two prospering, West Midlands-bred clothing brands having such a strong presence on Blythe Valley Park, could a cluster form? There is certainly the potential for them to act as a magnet for others, including the digital supply chain that they will attract. In the coming years, we could well see more e-tailers gravitating to the area. Furthermore, given the speed of growth enjoyed by Gymshark and Lounge underwear, these too could be young Birmingham businesses.
In Quarter 4, Dutch firm, Lely – having moved up from Warwick into serviced offices on a temporary basis at Blythe Valley Park – took 6,180 sq ft at Quartz Point. Lely specialises in advanced technology for the dairy farming industry – including automation and robotics for milking, feeding and animal care.
The business was looking for a permanent base where they could establish a showroom and UK head office. Fortunately, Quartz Point, which is situated opposite the entrance to Birmingham Business Park, provided exactly that. Indeed, the self-contained office building offers the flexibility they need to shape and brand it as their own.
Also in Q4, weighing and inspection instruments specialist, Minebea, doubled its office space on Birmingham Business Park, by taking 4,271 sq ft at 2670 Kings Court.
Both transactions underline the growing dominance of the tech sector at Junction 6 of the M42, particularly on Birmingham Business Park.
We have seen some occupiers take steps to reduce or vacate their office space in response to the pandemic. However, by and large, businesses won’t relinquish their office space because, chances are, they won’t get it back.
It’s been widely reported, globally speaking, that occupiers are considering major and fundamental adjustments to their operations, in light of the pandemic. This would include changes to their office space arrangements that would lead to a significant reduction in commercial property commitments. However, in the M42 and Solihull office market, we have yet to see businesses leaving en masse, and we’re not likely to.
High quality office space in Birmingham’s out-of-town market is in such short supply. As a result, occupiers – particularly those in larger space – will do their best to hold onto their existing space. In reality, were they to give it up, they would struggle to find it again at the same building or nearby in the future.
It’s also worth noting the profile of some of the occupiers at key business locations such as Birmingham Business Park. With large national and international businesses, decisions are made with consideration of the organisation’s full, national – or indeed global – picture. As such, these occupiers will take a long-term view to their commercial property decision-making.
When we consider the M42 and Solihull office market’s severe supply drought, it is somewhat impressive that it still managed to achieve what it did during a pandemic year.
Though we saw the letting of 1 Blythe Gate to Lounge Underwear, we are seeing fewer larger deals. Supply issues are apparent across the entire M42 and Solihull office market, in every size bracket. It’s the lack of larger available space, however, that’s having the most noticeable impact on the market statistics. Consequently, 2020 saw the second smallest average transaction size on record.
As stated in the above section, we have yet to see any major exodus from office space in the market. However, we have seen a few examples of downsizing during 2020. For example, in Q3, the letting of 3,356 sq ft at Friars Gate to testing, inspection and certification services provider TUV Rheinland, and 2,953 sq ft to Bank of Ireland also at Friars Gate, both represented a reduction in their office space.
Such is the thirst for office space in the market that, if an occupier vacates their space or moves into smaller offices, they free up a new, rare opportunity for another occupier to take space. However, so far, the space becoming available to date is on the smaller side. Whilst, on the face of it, last year’s take-up may not support the idea, there is a credible argument to build. Given the gap between supply and demand, now is a good time to consider new build projects in Solihull.
There are a few ‘saving graces’, both on the horizon and in the distance, for the M42 and Solihull office market, injecting some much-needed office stock.
Ingenuity House – designed by Sheppard Robson and originally built as the headquarters for contractor and outsourced services provider, Interserve – has brought 114,635 sq ft of BREEAM Excellent, Grade ‘A’ office space to the market.
The property is located on Bickenhill Lane, adjacent to Birmingham Airport, Birmingham International train station, the NEC and 3 minutes’ drive from the new HS2 Interchange station. It was pre-let to Interserve in 2015 with practical completion in 2018.
However, since the restructuring of Interserve, Ingenuity House is now being marketed on a leasehold basis. This is a significant piece of office space in a market that has been constrained for several years by short supply.
Ingenuity House features an innovative, forward-thinking design built around sustainability and wellbeing. Its square footage is spread over four floors of 26,000 – 31,000 sq ft. Intriguingly, the building utilises smart technologies to advise its occupiers of how to make best use of its space.
In November, Solihull Council unveiled further plans for its new town centre masterplan, which comprises the development area called Eastgate. This now provides a clear blueprint for future investment and development at this site. Consequently, we can say that over the next 15 years it includes, amongst others:
This scheme will include a landmark office scheme called Westgate. This will deliver 114,000 sq ft of new Grade ‘A’ office space over seven floors in a key location close to Solihull Train Station.
Another entity with big plans for the Solihull area is the Urban Growth Company (UGC), which is behind delivering the UK Central Hub in Solihull – “Europe’s best-connected destination for business, leisure and living”.
UGC is an organisation set up by Solihull Council to coordinate and lead infrastructure investment and development at The Hub.
The Hub, to be delivered in 2030, seeks to connect the already established element of Birmingham Airport, the NEC, Jaguar Land Rover and Birmingham Business Park with the development site of Arden Cross, built around the forthcoming HS2 Interchange Station.
In preparation for this, designs were agreed in July to transform the current 1970s Birmingham International Station into a 160,000 sq ft “multi-modal transport facility”. This international gateway will accommodate 16 million passengers a year predicted to use the station within the next 20 years.
This project is also being led by the UGC and a review of their progress in the area in 2020 is summarised in the following short video:
The diversity of the M42 and Solihull office market has always been well documented and 2020 was no exception. In fact, with the likes of Lounge Underwear, BioCare pharmaceutical supplements, the National Fostering Agency and Evo Dental implants all taking space in 2020, the traditional business sectors are being overshadowed by this growing strength of diverse businesses in both numbers and presence.
Given the diversity and resulting proven resilience of the M42 and Solihull office market, we see a brighter 2021. As lockdowns and restrictions are lifted – it should return to more normal levels of take-up.
Commenting on the progress made by UGC, its Managing Director, Jonathan Bretherton, said: “The last twelve months have been critical, as we’ve moved from planning to delivery on many of our projects.”
Referring to the Construction Framework Agreement they have now agreed with HS2, Jonathan explained: “We’ve reached an in-principle agreement with HS2, the WMCA and Arden Cross Ltd, along with a funding plan, to deliver multi-storey car parks for up to 7,500 car parking spaces at the HS2 Interchange Station. This is a game-changing intervention because it removes the need for massive surface car parks and enables the £3bn gross development value scheme, years ahead of the HS2 Interchange Station opening.
“These projects, combined with other planned highways infrastructure projects and electricity reinforcements, are helping deliver our ambitious vision for The Hub.”
Ahead, is the promise of new office developments coming onstream and major infrastructure developments in the pipeline. As such, the long-term future for Birmingham’s out-of-town office market continues to provide confidence.
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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Contact Malcolm Jones
0121 233 2330
