A lack of grade A office space is driving up rents in the M42 and Solihull office market to record post-2009 levels, according to Birmingham-based independent commercial property agency KWB.
Mark Robinson, Director in KWB’s Office Agency Team, says that rents for new grade A space have now passed £23.50 psf and will continue to increase over the next 12 months, as well as applying upward pressure to rents for refurbished space.
He says: “There is no brand new Grade ‘A’ office space available at present in the Solihull and M42 office market, until IM Properties’ 15,000 sq ft speculative office at Blythe Valley Park becomes available next year. The only other way an occupier can acquire new space is to agree a pre-let at a rent of at least £23.50 per sq ft on a minimum 15 year lease.
“However, there is still some availability of refurbished stock, with property developers such as
Canmoor doing an excellent job at Birmingham Business Park, securing new occupiers and putting much needed space into the Solihull office market. Here rents are around £20.00 – £22.00 psf, although, due to the on-going shortage, available space tends to move quickly.”
According to KWB’s annual review the market for offices in Solihull and M42 remained incredibly consistent throughout 2016, despite the outcome of the June referendum. Of the 312,497 sq ft total transacted in 2016, 154,341 sq ft was transacted in the first half of the year and 158,156 sq ft in the second six months.
Mr Robinson continues: “Enquiry levels in 2017 continue to be unaffected by the Brexit process. They are currently up on where they were this time last year – indicating a defiantly healthy property market.
“The market for offices in Solihull and the M42 corridor is typically more sustainable than Birmingham city centre, as can be said for many out-of-town office locations, and industrial locations also. The impact of a significant economic or political event tends to have a more visible effect on the transaction figures of a city centre, while the business park market has a wider and more diverse range of business sectors that leads to a more sustainable level of demand.”
Key Solihull office market transactions in 2016 were:
- Uniper – 32,692 sq ft at 2300 The Crescent, Birmingham Business Park
- Occupier not disclosed – 26,498 sq ft at 2920 Trident Court, Birmingham Business Park
- Phoebus Software – 14,967 sq ft at Lansdowne Gate, Solihull
- Caterpillar Financial Services – 13,811 sq ft at Friars Gate, Solihull
- Canon UK – 11,989 sq ft at 3180 Park Square, Birmingham Business Park
- MWH – 11,952 sq ft at One Paper Mill Drive, Redditch