The best quarter of office lettings in the Solihull and M42 office market for more than three years has significantly reduced the available office space, making pre-lets, or design and build projects, almost the only option for large occupiers, according to Solihull and Birmingham-based independent commercial property agency 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, leaving occupiers struggling to find accommodation, 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 NECC.
“Strong take-up, coupled with landlords’ decisions to convert 200,000 sq ft of office accommodation to residential in Solihull town centre, means that office space is at a real premium and rents are under increasing upwards pressure,” continues Mr Jones.
“Accountants Jerroms are believed to have paid a record rent in the mid £20s psf 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 accommodation 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 £25psf for the development to stack up,” concludes Mr Jones.