Office space Solihull and the M42 corridor – research Qtr 4 2015

465,275 sq ft – another great year for office space in Solihull and the Birmingham out-of-town office market, with several substantial and significant transactions, most notably, 114,000 sq ft pre-let to Interserve and 46,000 sq ft let to National Grid.  In addition, Changan Automotive acquired a part-investment office complex, totalling 80,000 sq ft, at Birmingham Business Park for their own phased occupation.

With no speculative developments for office space in Solihull on the horizon, demand is starting to outstrip supply.  This leaves occupiers with few options and rents have been pushed up, particularly on the highest quality office space. Unlike Birmingham city centre, the out-of-town office market has yet to respond with speculative development – choosing to refurbish many substantial pieces of existing, vacant space – but that could be set to change in the near future.

Inward investment

Changan Automotive, the Chinese automobile group, completed the acquisition of 80,000 sq ft at Parkside, Birmingham Business Park. Initially occupying 27,000 sq ft of the scheme – space that was secured in a temporary lease earlier in the year, Changan occupies office space in 3500 and 3700. Consolidating existing offices in Nottinghamshire and Warwickshire, this is an excellent example of inward investment for the area.  The site will form the worldwide HQ of its Powertrain and R&D divisions, housing c. 200 staff.

Changan has been granted planning permission to demolish and rebuild 3600 Parkside to create a new, state-of-the-art research and development centre, or ‘test cell’. The remaining units of 3800 and 3900 Parkside are currently occupied – but are likely to provide Changan with readily available space for future expansions of their workforce at the site.

Availability of office space in Solihull and the M42 Corridor: New stock

With only 10,000 sq ft of brand new, Grade A office space in Solihull and the M42 Corridor remaining, and no speculative development on the horizon – an obvious shortage of high quality office space now exists. Occupiers demand high quality space, and this is why investors and developers have been motivated to refurbish stock extensively, even down to the complete overhaul of all mechanical and electrical elements of the property – making it attractive to occupiers.

Availability of office space in Solihull and the M42 Corridor: Refurbished stock

Grade A under construction/refurbishmentsq ftAvailable
Phoenix Building50,000Q4 2016
Trident Court41,000Q4 2016
31 Homer Road63,000Q1 2017

Shortage of high quality stock is a developing issue. Demand remains strong and landlords are planning comprehensive refurbishments of existing office stock to meet occupier expectations.

Key transactions for office space in Solihull

  • Interserve – acquired 114,000 sq ft at International House, largest transaction of office space in Solihull in 2015 – an off-market pre-let
  • Changan – acquired 80,000 sq ft at Parkside Court, Birmingham Business Park – part investment purchase with Changan currently occupying 26,000 sq ft
  • National Grid (Xoserve) – leased 46,000 sq ft at Lansdowne Gate, Solihull town centre – a rare large letting for office space in Solihull town centre, seldom seen due to lack of supply
  • BT – consolidated into 20,000 sq ft at 4520 Birmingham Business Park (closed market transaction with previous occupier, EE)
  • Ryder Trucks – consolidated several Midalnds locations into 17,000 sq ft at 2610 The Crescent, Birmingham Business Park

The JLR effect

JLR, now the largest car manufacturer in the UK, and the automotive industry as a whole, continues to have a positive effect on the region’s economy and real estate market. It’s also worth noting here, the companies in the same or related industries who are relocating to office space in Solihull and the surrounding area. The most important of these would be Changan’s acquisition of Parkside but also includes, more directly, companies who are part of, or keen to be part of, JLR’s supply chain.

Business sectors taking office space in Solihull and the M42 corridor

Utilities and automotive continued to take a significant share of the take-up.

However, professional services showed the highest take-up, influenced by the Interserve pre-let.

The Telecoms, Media and Technology (TMT) sector also represents a strong portion of 2015’s office lettings.

Solihull and the surrounding areas continue to be popular among these sorts of companies, with BT, Convergence Group and Edenhouse joining existing, larger, occupiers such as Pinewood Technology and Steria.

Investment transactions for office space in Solihull and the M42 Corridor

Key 2015 transactions

AddressPurchaserSq ftPriceYield
Sandford House, 41 Homer RoadAEW34,097£5.4m10.94%
Birmingham Business ParkBlackrock362,853£85.0m8.20%
2 Prince’s WayFidelity70,220£19.0m7.39%
3300 Solihull ParkwayAtos Origin32,792£6.0m7.00%

Investment activity in the out-of-town market has been strong, with the most notable transaction being the purchase of Birmingham Business Park by Blackrock for £85 million.  Strong occupier demand for office space in Solihull, and limited stock has resulted in two potential investment sales being shelved by the vendors, and the forthcoming availability of investment product looks in scarce supply, similar to the occupier marketplace.

Transactions for offices in Solihull and the M42 corridor by region

AreaSq ft% of sq ftNumber of transactions
J6 M42302,73965%29
Solihull TC/J5 M4271,48715%13
J4 M4271,26515%15

The lion’s share of transactions, and of course square footage, is centered around Junction 6 of the M42 – this is largely due to it being the location of Birmingham Business Park which has the most, and the largest, pieces of office space available in the region – despite it now being around 90% occupied.

Rental levels of office space in Solihull and the M42 Corridor

Rental levels of office space in Solihull and along the M42 corridor hit the high teens in 2015, on stock that achieved mid-teens throughout the recession.  This rate of increase is expected to continue, and we are likely to see open-market, headline rents breach the £23 per sq ft mark in this area during 2016.

Outlook for 2016

While there is a flight to quality from occupiers, there is no speculative development on the horizon. With constrained supply and upward pressure on rents, pre-lets are likely to drive future rental growth.

“Last year saw over 60 companies expand within, or relocate to, the area. These transactions totalled over 450,000 sq ft – representing 3,200 Solihull jobs. Solihull continues to draw international corporate interest – with a quarter of 2015 transactions resulting from Foreign Direct Investment.

“Already home to major brands including Arup, Oracle, Siemens, Fujitsu and Balfour Beatty, it’s great to now welcome Changan Automotive with their 80,000 sq ft acquisition at Birmingham Business Park. We look forward to seeing them develop Parkside Court into their new powertrain R&D headquarters, over the coming years.

“Looking ahead, the market is to be further strengthened through a major junction improvement, at M42 junction 6, to accommodate redevelopment in the area, supporting access to growth at Birmingham Airport and the NEC, estimated at over £300 million.”

Anne Brereton, Director of Managed Growth, Solihull Metropolitan Borough Council

For more information

See full details of the transactions for office space in Solihull and M42 corridor.

Download KWB Office Market Review 2015.

For more information on office space in Solihull and the M42 corridor, please contact Mark Robinson on 0121 212 5994 or email or Nigel Tripp on 0121 212 5981 or email