The Bristol office market has finished 2023 on a high with strong take up for the final quarter, reports the Bristol Office Agents Society. The city centre office market has seen a flurry of deals cross the line in the final quarter of the year to give better than expected take up figures, whilst the out of town market has maintained a steady level of demand.
Bristol’s city centre market saw 34 deals complete in the final quarter with an average deal size of 5,682 sq ft, and a quarterly take up of 193,183 sq ft. This is both the highest quarterly take up for the year and also the highest volume of deals seen in any quarter since Q1 2022, and gives a total annual take up in the city centre, for 2023, of 419,180 sq ft.
In the city centre, quarter four saw three deals in excess of 10,000 sq ft, the largest of which was Dyson’s long awaited acquisition of 66,317 sq ft at 1 George’s Square. In addition to this DLUP have committed to the pre-let of 28,550 sq ft at L&G’s comprehensively refurbished Neighbourhood North, and Ecosurety have purchased 10,727 sq ft of space for their own occupation at Picture House.
Headline rents in Bristol city centre have remained stable through 2023 at £42.50 psf but with space under offer at rents of £44.00 – £46.00 psf it is expected that these will increase again through 2024. In addition to stable rents, incentives remain at a low level and these trends are expected to continue as tenants seek, and are prepared to pay for, high quality space. The gap between prime and super prime will only grow in 2024.
Whilst several developments are on track to complete in 2024, the number of new developments that started on site through 2023 was less than 2022 so whilst there is supply for the shorter term, long term supply remains tight, especially for super prime accommodation which is going to drive top end rental growth. Schemes due to PC in 2024 include, CEG’s EQ which is circa 80% pre-let or under offer, Trammell Crow and Tristan Capitals’ Welcome Building which is circa 25% under offer and AXA / Bell Hammer’s Assembly Buildings B & C which have also secured pre-lets. There are also a number of comprehensive refurbishments expected to complete through 2024 including Credit Suisse’s 3 Rivergate, Oval’s The Fairfax, M&G’s Temple Circus and CEG’s Crescent.
The Bristol out of town market experienced a healthy level of demand with a Q4 take up figure of 74,792 sq ft, to bring the annual total to 276,867 sq ft. This is just below the 5 year average for the period by 6%, albeit slower than hoped and generally for smaller suites. Quarter four saw 18 deals cross the line, which is the most active quarter of 2023, but with only one deal of over 10,000 sq ft the average deal size was 4,155 sq ft. The largest of these lettings was Hewlett Packard’s acquisition of 26,746 sq ft at Lakeview. Q4 also saw the completion of CEG’s 1000 Aztec West, the first major new office space to be delivered for many years in the out of town market.
James Preece, Office Agency Director at Colliers commented “Following a challenging first 9 months, it was great to see the Bristol office market bounce back in the final quarter of the year. Prime rental levels have been pushed by occupiers willing to pay more for the best-in-class sustainable office space and this trend looks set to continue in 2024. There are a number of larger deals under offer and requirements in the market, so we are expecting to see far better conditions than last year.”
CSquared’s Office Agency Director Andy Heath added; “Whilst the overall core stats for 2023 do not make good reading, we began to see the return of proper market activity in Q4 which we expect to see continuing to grow during the next 12 months. The lack of any major development commencements during the last 18 months will create an acute shortage of super prime supply in 12-24 months’ time which will lead to some interesting headline transactions. Some astute occupiers are already aware of this and are out looking in the market far ahead of when you’d expect them to start their occupational strategy for a potential relocation.”
