Office space Solihull and M42 corridor – quarter 2 2015 take-up

Q1’s market predictions for offices in Solihull and M42 corridor have been confirmed, with Q2 delivering Solihull’s largest ever pre-let, and transaction figures, for a 3-month period, that exceed the market’s annual average take-up by 25%. Many larger office requirements are being satisfied, as companies continue the trend of consolidation – focused on junctions 4 and 6 of the M42. Elsewhere, Bromsgrove and Redditch office markets fall victim to the sheer lack of vacant, good quality office space, and investors/developers are urged to capitalise on demand.

Largest pre-let of offices in Solihull, ever, as Interserve prepares to consolidate

In a closed market deal completed directly between landlord, Standard Life, and Interserve, one of the world’s foremost support services and construction companies, the redevelopment of International House offices in Solihull has been secured – in a pre-let of 145,000 sq ft. It is understood that this transaction represents a consolidation of four of Interserve’s smaller locations. A pre-letting of this size, accompanied by yet another high achieving quarter, shows a strong confidence in the future of the Solihull and M42 office market – similar to that seen in Birmingham city centre.

A bumper quarter for Solihull office space, with or without the Interserve skew

With 277,175 sq ft of office space in Solihull, this quarter has seen transacted 125% of the average annual take-up, in just 3 months. Even with the Interserve pre-letting taken out of the equation, the market would still have achieved over 6 months’ worth of office lettings in a single quarter. The Solihull office market has been particularly strong over the past 18 months. The diversity of industries operating in the area has ensured a steady level of take-up, driven by the attraction of the area’s amenities and communication links – both national and international.

7 transactions for office space in Solihull over 10,000 sq ft

In recent years, there has been a notable lack of deals over 10,000 sq ft in the Solihull office market. 2013 yielded 4 deals in excess of 10,000 sq ft, and 2014 yielded 9. Including Interserve’s 145,000 sq ft pre-let, this year Q2 alone has seen 7 deals over 10,000 sq ft.

The increase in size of lettings, as well as investment, in the area shows an office market gathering pace. This momentum is set to continue into future quarters and, as stock depletes, landlords, investors and developers will have very real and enticing opportunities for investing in new build office properties and refurbishment programmes.

Lack of office space in Solihull town centre drives market demand to Junctions 4 and 6 of the M42

In recent years, a lack in availability of large office space in Solihull town centre has directed companies to two key local areas, junctions 4 and 6 of the M42. Solihull town’s booming retail economy, which was unaffected by the recession, has led to the conversion of office space into retail outlets, in order to meet the demand for retail space. Most recently, the town centre office market lost 25,000 sq ft of office space at St Catherine’s Court, which will soon become a Waitrose outlet.

Birmingham Business Park has seen a wealth of deals during Q2, showing that demand for office space at Junction 6 remains consistently high:

• Crimson IT and recruitment consultancy: relocating from Coleshill to 7,729 sq ft of offices at 2640 Kings Court
• CT Global Freight: taking 4,582 sq ft of offices at 1720 Birmingham Business Park
• Ryder Trucks: taking 16,668 sq ft at 2610 The Crescent
• Changan, Chinese automotive manufacturer: taking 24,843 sq ft of 3 buildings at Parkside

Whilst Junction 6 lettings have been strong, Q2 showed that junction 4 of the M42 is holding its own. Friars Gate saw two lettings: Bank of Ireland taking a 10,400 sq ft part of the 2nd floor and 4,100 sq ft was let to Thyssenkrupp Lifts – who took part of the 3rd floor. In addition to this, Q2 also saw, telecommunications company, Convergence Group take 10,379 sq ft at One Cranmore Drive and Solihull Metropolitan Council secured 10,016 sq ft of Solihull office space at 3 The Green.

A large proportion of the demand has been from companies looking for better quality office space, which is more efficient and only a short drive from their current location. Exceptions to this would be those lettings that represent consolidations, such as Interserve, Ryder Trucks and Changan.

Consolidations show no sign of abating

The consolidation trend we continue to see within the Solihull office market, particularly focused on offices at Birmingham Business Park, has raised the frequency of larger lettings taking place, and with it, the average letting size and transactions total, too. Interserve is the most notable of these but consolidations also include Ryder Trucks, relocating 5 offices from across the country into 16,668 sq ft at 2610 The Crescent, and Changan who is relocating its Nottingham and Warwickshire research operations into 24,843 sq ft of Parkside offices at Birmingham Business Park.

Smaller companies still attracted to Solihull town centre but change could be afoot for Solihull’s SMEs

We have seen this quarter that there is still a clear demand by Solihull’s smaller companies, or those with a smaller office requirement for offices in Solihull town centre, with deals such as:

• Floream, online education – 1,384 sq ft at Unit 1, The Courtyard
• Davisons Solicitors – 1,275 sq ft at Unit 4, The Courtyard
• Projex Solutions – eco construction – Dominion Court, 1,604 sq ft
• New Life Mortgage Funding – Warwick House, 3,846 sq ft
• Trayport, energy trading – Radcliffe House, 5,368 sq ft

However, this quarter has seen UBCUK acquire nearly 17,000 sq ft at 1310 Solihull Parkway on Birmingham Business Park. A new serviced office centre at Birmingham Business Park will provide smaller amounts of high quality office space, in what has become a very prosperous area. It is expected that this will draw some of Solihull’s smaller companies out of the town centre, and into offices within the vibrant and heavily active Park.

Demand is there, but Redditch and Bromsgrove office drought brings market lettings to a halt

This quarter saw no lettings for office space in Redditch or Bromsgrove. There are requirements from occupiers in the market for office space in these areas, but the current lack of high quality office space has given occupiers nowhere to go. There is some vacant space which can be refurbished to a competitive level, and with a needlessly dormant quarter such as this, the call for property owners/developers to act on this demand has never been more prevalent.

KWB achieves 55% of Q2 2015’s open market deals for office space in Solihull

KWB achieved 72,711 sq ft of the 132,175 sq ft open market lettings conducted in the Solihull office market in Q2, which equates to a majority share of 55%. This is discounting Standard Life’s pre-let of space to Interserve, which took place in a closed market deal directly between landlord and occupier – without the involvement of an agent. KWB was also responsible for 4 of the top 5 deals in the quarter.

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

For more information, please contact Mark Robinson on 0121 212 5994 or email mrobinson@kwboffice.com.