More than 300,000 sq ft of offices along the M42 corridor were leased or changed hands during the first six months of 2015, according to the office team at property adviser Bilfinger GVA.
The figures — for the area between Junctions 4 and 6 of the M42 motorway including the NEC site and Birmingham Airport — show a solid improvement over the same period last year when just under 200,000 sq ft of deals were completed.
GVA also notes that 2015’s transaction momentum is gathering pace with a “particularly strong” second quarter. Between April and June 277,125 sq ft was traded, far above the first quarter returns, and a rise of 91 per cent on the same 2014 period.
The activity includes a combination of lettings from both traditional out-of-town office parks and town centre locations, among them Kings Court, Bishop’s Court and The Crescent on Birmingham Business Park, and Cranmore Drive at Junction 4 of the M42.
Several lettings were in excess of 10,000 sq ft, including the Bank of Ireland’s lease of space at Friars Gate in Solihull, Convergence Group’s letting at Cranmore Drive, and Solihull Metropolitan Borough Council’s letting at The Green; all of which Bilfinger GVA acted on.
There were also lettings at Birmingham Business Park to Changan Automotive and Ryder Trucks for 24,843 sq ft and 16,668 sq ft respectively. But the most significant second quarter contribution was Interserve’s acquisition of the freehold at International House in Solihull, close to Birmingham Airport, where the multinational support service and construction company intends to develop a new 145,000 sq ft-plus headquarters facility.
“These are the highest levels of activity that we’ve seen for some time and are a continuing improvement on the figures that were returned for the same period in 2014,” commented Bilfinger GVA director, Adrian Griffith.
“The great story here is that activity in both Birmingham city centre – which saw over 645,000 sq ft of transactions – and the out of town market has seen a tremendous first half to the year.
“This is the first time for a while that these quarterly figures don’t include a raft of lettings in peripheral locations such as Redditch or Bromsgrove, but are instead focused on the core of M42 corridor market, particularly between Junctions 4 and 6.”
With no speculative out-of-town commercial development currently underway, availability of Grade A office stock is continuing to fall. This, in turn, is forcing occupiers to find alternative ways of satisfying their requirements.
“While good quality stock continues to diminish, we are seeing some occupiers considering either purchasing sites to develop by improving their densities, or refurbishing existing offices, some of which are over 20-years-old, by stripping back the building to shell and core then providing a modern Grade A specification,” Griffith continued.
“This is exactly what we’re currently seeing with Interserve’s acquisition of International House in Solihull, and with some landlords at Birmingham Business Park in the refurbishment of first generation offices.”
The GVA director said that while there are disadvantages in terms of the timescales required to secure new premises in this manner, this is however “helping to refresh the levels of stock that are available around the M42 corridor and breathing life back into 25-year-old stock,” whilst securing good long-term income for landlords.
