The best quarter of office lettings in the Solihull and M42 office market for nearly four 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.
As in Q4 2018, Birmingham Business Park was the dominant location for sales and lettings during Q1 2019, in which the market transacted 119,236 sq ft across 14 deals, the best quarter since Q2 2015. Birmingham Business Park secured six transactions totalling 52,146 sq ft, leaving it and many business parks in the area, with very little available space.
“The office vacancy rate in the Solihull and M42 corridor office market was already at a 10 year low before this successful quarter, which means the lack of available office space is now in danger of significantly restricting the number of future transactions, at a time when the market is expected to be particularly active, as 2019 contains more lease events than a typical year,” says Malcolm Jones, KWB’s Director of Office Agency, writing in KWB’s Q1 2019 M42 and Solihull Office Market Report.
“With only IM Properties’ refurbishment of 53,882 sq ft at 01 Blythe Gate underway, and its planning application to build a further speculative 15,500 sq ft HQ building for Autumn 2020, both on Blythe Valley Business Park, if occupiers wish to stay within the area, they will have to stay put long-term or extend their stay to consider, and accommodate time for, Design & Build.
“This will require them to commit to a significant amount of space, at least 10-15,000 sq ft, on a 15-year lease, which is longer than many are now willing to sign up for,” explains Mr Jones.
The largest letting of the quarter was to serviced office provider, MSO Workspace, which took 27,764 sq ft at 2010 The Crescent on Birmingham Business Park. This is the second substantial letting to a serviced office operator in the area in the last 12 months, after Bizspace took 23,749 sq ft at Zenith in Solihull in Q1 2018.
While Birmingham city centre has seen flurries of lettings to serviced office operators over the past two years, the out-of-town office market has been slow to respond to the growing demand for flexible office space.
“The letting to MSO Workspace, added to Bizspace’s centre and the existing UBC Serviced Office Centre at Birmingham Business Park, should help occupiers looking for flexibility during uncertainty, and provide some much needed quality office space for small businesses,” says Mr Jones.