With a lack of brand new Grade A accommodation in Bristol city centre available for immediate occupation, and no new speculative development underway, the commercial property market will see a significant restriction on total supply over the next twelve months. Ben O’Connor, regional head of offices at independent property adviser GVA, suggests that with occupier interest still high, there’s no better time for developers to have faith in the future of the city and start building speculatively again.
“Demand is building for top end stock in the city centre,” he says. “And with some speculative building happening in cities such as Cardiff and Birmingham, there’s a huge opportunity to back the future growth of Bristol. Fortune favours the brave, and despite the economic conditions, maybe now is the time to take that step.”
Due to the impact on business confidence from the current economic uncertainty, there has been a below average take up of office space, not only in Bristol, but throughout the UK, according to GVA’s latest Big Nine quarterly report of the offices market.
Across the nine regional centres studied in the report – Bristol, Cardiff, Birmingham, Manchester, Leeds, Newcastle, Liverpool, Glasgow and Edinburgh – city centre and out-of-town take up was recorded at 1,487,000 sq ft in Q2, 6% below the quarterly average.
Bristol take up in the city centre stood at 96,152 sq ft in Q2.
Ben O’Connor adds, “The most active sectors in the Bristol city centre market are currently financial and business services, in particular solicitors and accountants. The media sector is also buoyant, attracted particularly by locations such as the Temple Quarter Enterprise Zone. Out of town, the occupier range is broader with defence, aerospace and research/development often linked to the resident universities.
“Many of the active enquiries in the market are existing local and regional occupiers with lease ends or break clauses approaching. Many are considering trading up in terms of quality, albeit in some cases down in terms of size, to take advantage of attractive rent fee packages.
“With just 295,000 sq ft of Grade A space currently available in Bristol city centre, such as at Bridgwater House, Linear Park and Temple Back and some already in solicitors hands, latent demand is building.”
Take up across the country is dominated by much smaller transactions with over half of take-up Grade B quality – coupled with fewer large grade A deals. Landlords are keen to re-let or re-gear and offer increasing flexibility on lease terms and tenant only break options.
Whilst lease events will provide a foundation to occupier moves, cost efficiencies are at the forefront of business decisions, and some will see this as an opportunity to downsize, says the Big Nine report.
Headline rents have remained mainly stable over the last year. Bristol city centre stands at £27.50, and there is unlikely to be any significant rental growth this year.
Bristol features twice in the five largest city centre deals across the nine centres listed in the Big Nine report for quarter two: 23,077 sq ft to Foscombe, at 53-55 Queen Charlotte Street; and 20,785 sq ft to Bristol Rental Properties at Trelawney House in Surrey Street.
Out of town the largest deal in Bristol in quarter two was to the Jelf Group, for 24,350 sq ft at Hillside Court, Chipping Sodbury.
