The out-of-town office market in the M42 corridor saw an outstanding level of transactional activity last year, outstripping pre-recessionary levels.
The figures, which are compiled by property adviser Bilfinger GVA, show total activity in Solihull Town Centre and throughout the area’s business parks reached 489,687 sq ft across 2015, placing it well ahead of 2014’s total of 419,951 sq ft.
The figures were boosted by a number of stand-out deals throughout the year including the sale and leaseback of Interserve’s 113,657 sq ft International House near Birmingham Airport; the 24,843 sq ft letting to Changan Automotive and 19,625 sq ft letting to BT at Birmingham Business Park; and National Grid’s 46,000 sq ft letting in Solihull Town Centre.
The figures also show an increasing number of deals completed in excess of 10,000 sq ft, demonstrating a sharp uplift in demand from occupiers for larger office spaces.
Adrian Griffith, Director at Bilfinger GVA, said: “These figures are exceptional, driven by consecutive levels of activity across all four quarters of last year. We’ve seen an increasing number of deals completed in excess of 10,000 sq ft, with six in Q4 of 2015 alone. This is in stark contrast to the sub 5,000 and 10,000 sq ft that we’ve seen in previous years.
“Since October 2013 the enquiry level in the M42 market has rocketed. With limited stock, there are few opportunities for occupiers to negotiate against, which is why over the last two years we’ve seen rents return to their pre-recessionary 2007 levels.
“We’re now regularly seeing rental figures over £20 per sq ft at locations like Birmingham Business Park, with rents north of £22 per sq ft likely to become increasingly common. With little in the way of new developments coming forward, these increases reflect the quality of refurbishments taking place on existing stock.”
With little in the way of new developments coming forward, the rising rental figures reflect the quality of refurbished stock being brought back to the market.
With an extensive level of redevelopment around the M42 corridor both planned and underway, including the future delivery of HS2 and improvements to the retail offering in Solihull Town Centre, it is expected that demand for high quality space in the area will continue to remain high.
Adrian Griffith continued: “For the rest of this year, it’s difficult to predict whether we’ll see activity levels commensurate with 2015. With that being said, there are already 125,000 sq ft of deals under offer in the M42 market and it would only take a couple of sizeable pre-lets to tip the balance in favour of another stellar year.
“The question of whether any speculative development is undertaken to shore-up stock levels and meet future demand remains debateable. Stock levels at Canmoor’s Birmingham Business Park, for instance, are now at a 10 year low of around 12 per cent. Two years ago, it was at 25 per cent and this may be the year that demand drives availability on the park into single figures for the first time in over a decade.
“There is, however, 70,000 sq ft of space under refurbishment at Birmingham Business Park and a further 45,000 being refurbished or brought to the market by IM Properties at Blythe Valley which will be beneficial in the short to medium term.”