The past 12 months saw a significant upswing in activity in the West Midlands out-of-town office market, with 420,000 sq ft of deals completed across the year.
Leading independent property adviser GVA confirm that the figures, which represent business park activity along the M42 Corridor, demonstrate a considerable boost to the 224,395 sq ft of activity recorded in 2013.
Deals throughout 2014 were completed to a broad cross-section of occupiers, from small independent firms to large-scale multinationals, primarily at sites within the M42 corridor including Blythe Valley Park, Fore Business Park, Trinity Park, and Birmingham Business Park.
While over 59,000 sq ft of deals were completed in Q1 they were all sub-10,000 sq ft, with the largest being the 8,750 sq ft letting to UKDN at Birmingham Business Park. However, the market continued to improve with 26,000 sq ft taken by UTC at Fore Business Park and 22,000 sq ft by Pinewood Technology on Birmingham Business Park mid-way through Q2.
The largest transactions in the second half of the year both took place at Canmoor’s recently acquired Birmingham Business Park, with IMI and WM Housing taking 35,933 sq ft and 27, 134 sq ft respectively, with GVA acquiring for WM housing. GVA was active in both deals as joint letting agent with JLL and KWB.
Adrian Griffith, Associate at GVA, said: “The activity that we’ve seen in this market, particularly in the core area between Junctions 4 and 6 of the M42 is a clear indication of improving business confidence, coupled with the continued squeeze on availability for good quality accommodation of a certain size. From a landlord’s perspective, both Blythe Valley Park and Birmingham Business Park are almost completely let, reflecting levels of demand that we haven’t see for some time.
“As demand has risen, we’ve seen incentives at some sites drop by 40-60 per cent, driven by a lack of choice and opportunities in the market. While we’ve seen rents in some quarters creeping up, there has generally been a realignment of rental values as landlords consider the value of their stock against more achievable rental levels.”
Ongoing development of the area around the M42, identified in the UK Central Prospectus and extension to the runway at Birmingham Airport, have played a significant role in both new businesses looking to move into the area and existing occupiers securing longer-term commitments to the region.
Adrian Griffith continued: “Lettings to businesses such as IMI, which are taking longer-term leases are a strong indication of the ongoing desirability of the M42 corridor as an out-of-town business location, with superb links by road, rail and air to the wider UK and a growing number of international destinations.
“The next 24 months will see a number of lease expiries, breaks and regears that could create something of a merry-go-round of occupiers moving to more suitable premises.
“Towards the end of 2015, we could well see a number of larger deals being signed again. Landlords will also continue to refurbish existing stock to ensure that their stock remains desirable, particularly for those built in the 1980s and early 90s.”