Office space Solihull and M42 corridor – full year 2013 review
Overall, the market for office space in Solihull and the M42 corridor was more active in 2013, with 9% more transactions than in 2012 (59 vs 54) and total square footage (224,395 sq ft) in line with the long-term average annual take-up of 220,000 sq ft.
Of course, 2012 was an exceptional year with the 66,000 sq ft Virgin Media transaction at Eagle Court and 14,500 sq ft for AFH at Avon House, Bromsgrove. So, whilst 2013 was actually 100,000 sq ft less in take-up for offices in Solihull, the activity levels were higher. However, even taking the Virgin Media transaction out of the figures, the average transaction size is 22% lower, so whilst more occupiers were looking to take office space In Solihull, they were smaller transactions.
This demonstrates confidence and activity at a level, whilst the larger corporates still remain cautious. Larger occupiers tend to be driven by the desire for increased efficiency, consolidation exercises and economies of scale. Therefore, the financial benefits of any office relocation have to be clear before signing up to them.
Office space at Birmingham Business Park likely to experience a key year in 2014
It is pleasing to see that Birmingham Business Park has increased up the rankings. Junction 4 of the M42 is the most popular area for office relocation (36% of transactions), due to slightly more modern buildings with larger floorplates, greater amenities and better public transport making it more accessible than Junction 6.
| Office space transactions by: | Number | % | Sq ft | % |
|---|---|---|---|---|
| Solihull/M42 J4 | 21 | 36% | 77,128 | 34% |
| Redditch | 11 | 19% | 33,760 | 15% |
| Birmingham Business Park | 10 | 17% | 43,392 | 19% |
| Bromsgrove | 7 | 12% | 24,475 | 11% |
| Henley/Knowle/Meriden | 3 | 5% | 5,243 | 2% |
| Hampton-in-Arden | 3 | 5% | 4,145 | 2% |
| Coleshill | 2 | 3% | 10,999 | 5% |
| Wythall Green | 1 | 2% | 16,300 | 7% |
| Trinity Park | 1 | 2% | 8,953 | 4% |
| Total | 59 | 100% | 224,395 | 100% |
More and larger occupiers have been drawn to Junction 4 due to the availability of larger stock and amenities, whilst Birmingham Business Park has remained consistent with previous years. However, due to the growing lack of availability of office space, more occupiers will be forced to move north up the M42 which will result in Birmingham Business Park likely to experience a key year in 2014 with increased occupier demand. Due to the change of business park ownership from Goodmans to Canmoor, a fresh approach to marketing is being adopted, which is proving to be favourable with occupiers.
Automotive and aerospace sectors set to attract more occupiers for offices in Solihull
A key benefit for landlords of office space in Solihull and the M42 corridor is that the area seems to attract a wide range of business sectors. Whilst the automotive sector has been particularly active on the industrial side, and remains so, a growing number of automotive occupiers, some linked to the JLR supply chain, have taken office space.
We also expect a growing number of aerospace-related companies to become active in the area in 2015, as Rolls Royce completes on Birmingham Business Park. IT/software also remains an important employer.
Outlook for 2014 for offices in Solihull and the M42 corridor
With take-up remaining consistent with the long-term average, no new build being considered and only a limited number of pre-let opportunities available, 2014 will see a strong focus from large occupiers on good quality new or refurbished office space in Solihull, namely:
- FORE
- 4060 Lakeside
- Building 1 Trinity Park
We expect this list to be joined shortly by Lansdowne Gate in Solihull town centre.
The transfer of ownership from Goodmans to Canmoor on key stock on Birmingham Business Park has injected new impetus to secure occupiers. Blythe Valley Park has always been its main competitor but is yet to experience the same drive. Occupiers at Blythe Valley need certainty over the owners’ long term aspirations for the Park and what can be achieved on the existing product.
Offices in Redditch and offices in Bromsgrove remain popular with local occupiers and experience consistent demand, although a shortage of supply will become particularly apparent in 2014. Where there are opportunities to refurbish and asset-manage existing buildings, these should be exercised in order to deliver space to the market which enables occupiers to be more efficient.
Rents and incentives for offices in Solihull, Redditch and Bromsgrove will harden in 2014 as stock diminishes
As supply becomes increasingly limited, we expect to see a hardening of rental levels and incentives. This will be in those areas where lack of stock is most pronounced, namely Redditch and Bromsgrove, where building owners will be able to dictate terms with more certainty than recently the case. We expect terms to then begin hardening at Junction 4 due to the lack of supply, which in turn will push occupiers who want a keener deal with more flexibility and lower rents to look at Birmingham Business Park.
It is a similar picture to Birmingham city centre where there are a number of occupiers with lease breaks and expiries over the next 18-24 months. Only 4 of the 59 transactions in 2013 were over 10,000 sq ft which could lead to increased take-up this year if stock is available to meet demand. If these larger occupiers look to relocate and take what remains of existing good quality stock, then next year the pre-let market becomes more of a reality for those able to commit to longer term leases. We are already seeing landlords of new and refurbished Grade ‘A’ stock requiring 10 year terms certain.
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.
