Supply problems strangled office deals in key market
A lack of supply in the M42 and Solihull office market is threatening to create problems ahead of the expected cyclical renewals in the next two years.
The warning, from agents KWB, follows a “lacklustre quarter” for deals in the area.
Just 55,287 sq ft of space was taken up between April and June across 14 transactions. The first quarter of 2018 had seen 91,000 sq ft of space transacted, which leaves the market some way behind where it needs to be to match the average annual total of 330,000 sq ft.
Malcolm Jones, from KWB’s office agency team, said: “The cyclical nature of the office market would indicate that 2019 and 2020 should be bumper years, with many lease events set to occur five years on from the peaks of 2014 and 2015.
“How can the M42 and Solihull office market find a solution to this expected increase in demand, at a time when it is already struggling to meet current requirements?”
The largest deal of the quarter, which saw CSI taking 15,965 sq ft of space at 2940 Trident Court on Birmingham Business Park, effectively removed twice as much space from the market, as its existing Coleshill office space is earmarked for demolition to make way for HS2 rail infrastructure.
He added: “The amount of space available in the M42 and Solihull office market, particularly for larger occupiers, is being eroded each quarter, and it is really struggling to meet demand.”
There are plans for large-scale developments in the area, but there is little activity on site elsewhere.
Jones said: “Longer term, the plans for UK Central and Arden Cross will help to address the shortage of space. However, apart from IM Properties’ c.15,000 sq ft office, First, being speculatively developed on Blythe Valley Business Park, no other developments have moved any further forward than the planning stages.”
