The best quarter of office lettings in the M42 and Solihull office market for more than three years has significantly reduced available office space. This has made pre-lets, or design and build projects, almost the only options for large occupiers, according to Solihull and Birmingham-based commercial property agents, KWB.
“The office vacancy rate in Solihull town centre is effectively just 3%, only 7% at Birmingham Business Park, and Blythe Valley Business Park is now full. This is leaving occupiers struggling to find office space, with many of them turning to us for acquisition advice, particularly on pre-lets,” says Malcolm Jones, KWB’s Head of Office Agency, writing in KWB’s Q3 2018 M42 and Solihull Office Market Report.
Office take-up in the M42 and Solihull office market in the third quarter (July to September) of 2018 was 112,889 sq ft sq ft across 14 office space transactions, the highest since Q2 2015, removing a number of larger offices from the market, with six transactions in excess of 9,000 sq ft.
The largest deal of the quarter went to public services outsourcing group, Serco, which is relocating from Bournville into a 21,217 sq ft managed office facility at 31 Homer Road provided by Instant Offices. 31 Homer Road also secured the second largest letting of 16,833 sq ft to CGI, again for a relocation, from Trinity Park near the NEC.
“Strong take-up, coupled with landlords’ decisions to convert 200,000 sq ft of office space to residential use in Solihull town centre, means that office space is at a real premium and rents are under increasing upwards pressure,” continues Malcolm.
“Accountants, Jerroms, are believed to have paid a record rent, in the mid £20s per sq ft, for 15,081 sq ft at the FIRST office building, which was developed speculatively at Blythe Valley Business Park.
“Taking into account office space which is under offer, with the exception of Birmingham Business Park, there is practically no available office space for larger occupiers. The only option now for occupiers seeking a substantial headquarters building, of 40,000 sq ft and above, is to look to a potential design and build option. However, with current land values and the ever increasing cost of building, they would have to pay around £25 per sq ft for the development to stack up,” concludes Malcolm.
KWB is the most active office agent in the Solihull and M42 corridor, acting on more than 60% of sales and lettings. Each quarter, KWB produces comprehensive M42 and Solihull office market research, listing all the latest office transactions and providing its view of the current and future market. Further details about the current research can be found here.