Bristol’s office market bounced back in 2021 as people began to adopt hybrid working, according to a new JLL report, but the city needs to act now to tackle a major shortage of high quality space.
Office leasing take-up volumes for the city hit 540,900 sq ft, representing 90% of the 10-year annual average and buoyed by a strong final quarter, during which 250,000 sq ft of office space was let. The findings demonstrate a strong performance despite pandemic restrictions.
2021 was also a strong year for the Bristol market in terms of office investment volumes. A bumper first quarter saw investment volumes top £241m, meaning that the year-end total reached £261m, 23% ahead of the 10-year annual average.
The annual UK Big Six report by JLL also showed that the public administration and TMT sectors were the most active, each accounting for 30% of office space leased in Bristol. The largest deal to sign in the final quarter of 2021 was the University of Bristol taking 74,373 sq ft at 1 Trinity Quay.
Hannah Waterhouse, director in JLL’s office agency team in Bristol, said: “Keeping in mind that last year restrictions prevented people from going into the office, or people felt reluctant to return, it is quite remarkable that the Bristol office market – a barometer of the health of the city – performed so well. This points towards a positive post-Covid resurgence.
“A move toward hybrid working certainly supported this combined with a drive by employers towards providing the very best, smart space with strong well-being and sustainability credentials to attract their staff back to the workplace and meet their carbon reduction and energy use ambitions.
“However, Bristol faces a real shortage of immediately available high quality office space; there is around 14 million sq ft of offices in the city centre but more than 95% of it is let. The development pipeline is active, but we need more. Currently, it looks like we’ll have widening supply gap in 2022 so the city needs to act now to seize the moment and ensure it maintains its core city status.”
There is 566,800 sq ft of new build speculative space currently under construction in Bristol. Two part pre-let schemes – Halo at Finzels Reach and One Portwall Square – are due to bring 67,000 sq ft of speculative space to the market in 2022 but the remainder – EQ, Buildings B & C Assembly and The Welcome Building, totalling 500,000 sq ft – are not due to complete until 2023.
Headline prime rents for offices in Bristol finished 2021 at £38.50 per sq ft with new headlines set already this year at £42.50 per sq ft – a 10% increase. JLL predicts continued strong occupier and investor appetite in the city’s office market during 2022.
Simon Bennett, director in JLL’s capital markets team in Bristol, said: “Investors remain attracted to Bristol as a strong regional centre with a tight office supply and excellent levels of demand. We expect investment activity to remain strong amongst a wide range of investors, with demand for both prime office schemes and also repositioning opportunities where investors can refurbish and futureproof older buildings.”
There were 11 transactions in excess of 50,000 sq ft across the Big Six – Leeds, Birmingham, Bristol, Edinburgh, Glasgow and Manchester – during 2021 including BBC Studios leasing 60,253 sq ft at Bridgewater House, Finzels Reach, Bristol.
Elaine Rossall, head of UK offices research at JLL, said: “We’ve seen a significant uptick in city footfall in recent weeks and, as firms look to facilitate more collaborative and attractive workspaces for their teams, we can expect new build space, especially those with a high sustainability, wellness and smart technology focus to set new standards across the Big Six. That said, we should be mindful of the gap between prime space and the rest widening, with occupants and the race to net zero necessitating investment across the board.”
