The traditional lines between in-town and out-of-town office developments are becoming increasingly fluid, and this is likely to manifest further over the next few years. Future business parks will have a truly 24/7 offer, with diversity of use created through a blend of residential, retail, leisure and other amenities you would expect in a city centre.
In the Midlands, Solihull and the M42 corridor have long been established as the most significant office market outside Birmingham city centre and is the region’s main out-of-town offer. Now, schemes such as IM Properties’ Blythe Valley Business Park (BVP) in Solihull, above, are beginning to make this 24/7 offer a reality, with the imminent introduction of residential buildings and extended retail and leisure facilities.
This evolution could lead to movement of traditionally city centre occupiers out of town, and vice versa, as location becomes more flexible. Already, we have seen IT software developer ACS take space in Birmingham city centre, when they would typically have been expected to focus out of town. In reverse, recent transactions at BVP have included lettings to both lawyers Field Fisher and accountants PKF.
Consequently, while Solihull and the M42 corridor once attracted a different type of occupier to Birmingham city centre, they are increasingly demonstrating wide sector appeal. No single dominant sector is now readily identifiable, and the area has undergone a resurgence mirroring that of the city centre. This is evidenced by strong out-of-town take-up, which has averaged 420,000 sq ft (39,018 sq m) over the last two years.
For now, Solihull still presents a rental discount, with prime rents at approximately £23 per sq ft compared with £32.50 per sq ft in Birmingham city centre. A restricted development pipeline in both means this gap is likely to narrow.
As 2017 unfolds, the positive effects of HS2-linked relocations and ‘north shoring’ firms seeking cost efficiencies outside London will be felt in Birmingham city centre and beyond. As a result, we could start to see increased demand drive further rental growth in Solihull and the M42 corridor, potentially followed by the first speculative office development out of town for a decade.
Ultimately, the combined offer of the ever-strengthening city centre and out-of-town office markets in the Midlands means the region has a truly comprehensive offer, with ‘something for everyone’. The two markets can grow and develop in tandem, driving the success of the wider city region.
Read more: Spotlight: Birmingham Offices