The status of Cardiff as a big event city continues to prosper, despite the paucity of events that were able to happen over the last two years, according to Avison Young’s newly released 2022 Forecast: Cardiff.
The commercial real estate adviser reports that the city’s economy is due to grow by 5.4% during the coming year, more than double the pre-covid ten-year average growth rate. Much of this increase arises from bounce back from those sectors hardest hit during the pandemic, such as hospitality, the arts and entertainment, all of which are areas of strength for the city.
From an employment point of view, the city is expected to see a rise of nearly 5,300 posts in 2022, to a record high of 240,000, with unemployment forecast to fall from 5.7% in 2021, to 5.0% in 2022.
“This is a really encouraging situation to be in, given the last two years of disruption,” says Peter Constantine, regional managing director Avison Young.
“With the city’s next phase of regeneration now in motion, with key schemes at Central Quay, Dumballs Road and Atlantic Wharf, and public sector investment continuing to be put into public transport improvements, the city is very much focussed on the future.
“Across the commercial real estate sectors – hotels and hospitality, industrial, offices and residential land – we are seeing positivity and an optimism for 2022.”
The hotel market is underpinned by Cardiff’s status as a big events city, with Cardiff Council keen to drive investment in the city centre and complete a number of major regeneration projects. The Atlantic Wharf scheme anchored by the 16,000-seat indoor arena is a pivotal development which will transform Cardiff Bay. The residential development scheme at Dumballs Road will bring the Bay and city centre closer together. If everything planned were to be developed, this would create an additional 1,000 hotel rooms over the next decade, from budget such as the Premier Inn at Custom House to luxury at The Parkgate Hotel.
Cardiff’s leisure and retail offer is improving significantly, with the velodrome’s move to the other side of the city creating a Sports Village – in close vicinity to the ice rink and pool, and Marks and Spencer due to take part of the former Toys ‘r’ Us space. The city will also continue to see an increase in new entrants both in terms of new uses and experiential leisure this year. Boom Battle Bar opened during 2021, while Heidi’s Bier Bar and Gareth Bale’s Par 59 are due to open during 2022.
House price growth in Cardiff was exceptionally strong in 2021, at almost 12%, above the UK average. This has fed through to the land market, and developer demand is strong. We expect house price growth to slow in 2022 but remain strong relative to pre-pandemic levels and ahead of the wider UK.
Across the industrial and warehouse market, strong demand, with limited supply continues to be the story. At the larger end of the market, 2021 saw Genpower take a 100,000 sq ft spec build in Newport and Amazon acquire over 300,000 sq ft to partly service the Welsh market just across the border in Avonmouth. At the smaller scale, growth is being driven by SMEs, logistics providers and the NHS. This robust demand and limited supply will continue to drive rental growth in the market.
Occupier activity for offices during the course of 2021 was slowly improving, with liquidity in the market returning to ‘normal’ levels during the second half of the year. Nevertheless, the majority of demand continues to come from the smaller end of the market, and from the health and public sectors. Going into 2022, the increase in the number of requirements at the larger scale – 20-70,000 sq ft – bodes well for the market.
Peter Constantine concludes, “The future is bright for our city, with people keen to get back to a sense of normality. With a strong uptick in the global economy, and the lessons learned from living with Covid, money is being driven into real estate, with industrial and residential in particular continuing to be the focus of investor interest.
“We entered 2021 in a state of economic upheaval and uncertainty but exited the year with recovery very much the watchword. We have seen growth in the economy, and occupiers and investors alike are adapting to change and the new challenges we face. While omicron casts a shadow, the UK’s commercial real estate sector continues to show resilience and potential in equal measure. The pandemic has reshaped our industry but there is an opportunity to re-examine how our buildings and places can be leveraged to positively impact our economies, communities and the environment.”