Office space Solihull and M42 corridor – quarter 4 2014 take-up
It’s been an exceptional year for Birmingham’s out of town office market, with 418,000 sq ft of office space in Solihull and the M42 corridor transacted over the course of the year. This figure is nearly double the long term average (220k) for office space take-up.
Why was 2014 such a landmark year for the Solihull office market?
In a year when the market achieved nearly double its long term average, it raises the question why? In addition to companies performing better due to an improved economy, we believe that there are some key reasons for the success of the Solihull office market this year.
|Year||Total transactions for office space in Solihull/M42 (sq ft)|
- Consolidation: In terms of trends for new transactions, we have seen many companies consolidating their local satellite offices into one central location which needs to be highly accessible, and areas such as Solihull fit that bill perfectly. There’s a possibility of this being a national trend, of post-recession office relocations following lease breaks of various premises.
- Corporate market returns with drive for efficiency: An obvious appeal, to big corporates, of taking this measure is the efficiency and cost savings achieved by moving from multiple locations into better quality office space with larger floorplates, all under one roof. The reduction in day-to-day running costs of the overall facilities takes pressure off the headline rent. It’s worth noting that these companies are taking up the minimum space they require and so, if these companies continue to grow, it will most likely lead them, in the medium term, to acquire additional office space nearby.
- Cycle of office lease breaks: Another contributing factor is the cycle of lease events. In the Solihull office market, the average length of lease has been five years – although this is now lengthening. If we look back at a year with a particularly high number of office lease events, such as 2004, then we can see that pattern recurring in 2009 and 2014, when more transactions occur upon those lease ends. Having said all this on the prosperity of the Solihull office market in 2014, we are expecting strong results throughout 2015. Whilst 2014 Q1 was unremarkable, Q1 of 2015 is expected to see a lot of the enquiries which were active towards the end of 2014 come to fruition and this bodes well for the year.
Notable transactions for Solihull office space in Q4
- 4040 Lakeside: In Q4, West Mercia Housing sold their Barnsley Hall offices in Bromsgrove to Redditch & Bromsgrove Clinical Commissioning Group (RBCCG), a transaction totalling 7,157 sq ft. Earlier last year, IMI made the decision to move from 4040 Lakeside to 4060 Lakeside, increasing its office space on Birmingham Business Park by 8,000 sq ft – see separate news story on IMI. This provided West Mercia Housing with the opportunity to occupy the 27,134 sq ft of office space at 4040 Lakeside as their new HQ. The relocation of one of West Mercia Housing’s smaller offices to 4040 Lakeside on Birmingham Business Park is part of a process that the overall company is undergoing to consolidate its workforce and operations into one single office building. This consolidation process is a prime example of the trend that we have seen throughout 2014, which has led to so many deals being struck in Solihull and the M42 corridor.
- 1 Trinity Park – second largest letting in Q4: The second largest office transaction of the quarter was Presbyterian Society’s letting of 26,169 sq ft at 1 Trinity Park offices close to Birmingham Airport, to Lloyds Shipping, which comprised the first two floors of the building.
- 4 Arleston Way offices, Shirley: The consolidation trend continued with the letting of, cast iron cooker manufacturer, Aga’s 11,480 sq ft of space at 4 Arleston Way in Shirley, Solihull to Cala Homes. This move by Cala Homes was made to facilitate the consolidation of their smaller offices in Henley-in-Arden and Redditch into a larger property.
KWB sees a stunning 2014 in the out-of-town office market
Quarter-by-quarter, the success of KWB commercial agents within the Solihull and M42 office market in 2014 has been consistent and, now that the year has been completed, the full story is here to be seen. KWB achieved 42 out of 90 of the deals completed throughout 2014, with square footage equating to 60% of the deals done (250,000 sq ft out of 419,000 sq ft). These statistics demonstrate KWB’s continuing success in being the strongest office specialist in this market, by a considerable margin.
How is Solihull supporting the expansion of its office market?
As the demand for office space in Solihull increases and more satellite offices from the West Midlands are relocated to the area, how is Solihull responding to the influx of new people in the area? We are seeing multiple residential schemes in the Solihull area which are in development, and supporting the office space trend – developments such as Blythe Valley’s Phase 2, Cheswick Green and UK Central. IM acquired Blythe Valley to cater for the growing trends in both office space and residential and given the, increasingly evident, lack of Grade ‘A’ office space in the area, they’ve been ahead of other commercial property developers to have made this acquisition.
Office space in Solihull at critically low level
With demand for Grade ‘A’ office space now outstripping supply, after a long period of time with this space laying vacant, and office stock at such low levels, new speculative developments of office space in Solihull are now called for, particularly if the level of activity in 2014 continues into 2015. Incentives have reduced during the course of the year and landlords are not only now standing firm, but are looking for rental growth for the first time since 2006-2007.
Design and build offices in Solihull back on the agenda
We are now having serious conversations about design and build office schemes on M42 business parks. Occupiers are frustrated by the lack of choice of office space in Solihull, especially at junctions 4 and 6. Owners of large un-refurbished office buildings should also be looking at lease events as an opportunity.
The Birmingham Business Park turnaround
Similar to IM’s foresight is the cleverness of Canmoor’s acquisition of Birmingham Business Park. Since Canmoor acquired the scheme, the desirability of office space in the area has grown dramatically. As a result, in the 12 months that Canmoor has had ownership of Birmingham Business Park, office space amounting to 140,000 sq ft has been let on the Park, and this accounts for 40% of the Solihull office market deals in this period.
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 email@example.com.