Pent up demand for prime office accommodation in Bristol will reach tipping point in 2013, according to the latest sector analysis carried out by Colliers International.
National offices director Stephen Lipfriend told a gathering of business leaders on Thursday the continuing shortage of grade A office space was down to lack of new development rather than growing demand.
But he said present forecasts suggested the sector would reach a tipping point some time next year when demand for prime space would outstrip supply.
“At that point there will be pressure which may even see the first signs of rental growth.”
Although Q3 had proved the best quarter in 2012 there had been just one grade A letting of 7,000 sq ft, while a massive 42 per cent of all transactions had involved deals of less than 5,000 sq ft.
Stephen Lipfriend said flatlining demand continued to widen the gap between prime and secondary space.
“People can afford to take grade A accommodation these days instead of grade B. At the same time we are seeing increased grade C takeup as many buildings in the secondary categories are being taken out of the offices sector altogether and being converted into student accommodation or hotels.”
This trend had left grade B accommodation in limbo – making up 58 per cent of all stock but 64 per cent of availability.
Business leaders attending Thursday’s breakfast briefing were given an overview of retail, industrial, offices and investment performance from Colliers International sector analysts headed by research director Walter Boettcher, who said rental growth was flat apart from in London.
There was some activity in the telecoms, media and technology sector and sheer lack of space in the big six office markets including Bristol could trigger some improvements in 2013.
He said: “There is new demand coming in especially from foreign investors which will take up grade A space. There could be some lift in the office sector of the investment market.”
Walter Boettcher said the outcome of the US elections next month would help bring some much needed certainty back to commercial property markets.
“People are looking for continuity rather than the present uncertainty. There are investment funds out there but they are not moving at the moment. After the election there may be some progress.”
