The Bristol office market has continued a subdued but determined take up through Q3 2023, reports the Bristol Office Agents Society. Take up in the city centre has narrowed the gap between the quarterly figure and the 5 average and the out of town market saw strong take up to get ahead of the average figures for this period.
Bristol’s City Centre market saw 17 deals complete in the third quarter with a total take up of 77,253 sq ft and an average deal size of 3,830 sq ft. Whilst this is the lowest number of deals in a quarter so far this year and the lowest average deal size, this take up is just 15,000 sq ft below the 5 year average for the period. Furthermore, there remains a number of deals in the pipeline which should have completed in Q3 but have fallen into the final quarter of 2023 so these are expected to bring the yearend figures in line with average take up.
The key city centre letting for Q3 has been the 27,406 sq ft pre-let of the 4th floor at CEG’s EQ to Evelyn Partners. Other larger deals include Healix Health Services acquisition of 6,517 sq ft at 3 Temple Quay and ARM Ltds acquisition of 6, 472 sq ft at 10 Templeback.
Supply levels in the city remain low and whilst there are several schemes on site and due to PC in the next 6 – 12 months there have not been any new starts on site recently and this may be cause for concern for longer term supply beyond 2024.
Due to low levels of supply and steady demand, headline rents in Bristol City Centre remain stable at £42.50psf with several schemes now quoting above this level. In addition, incentives are also at a low level as tenants continue to place ESGs and wellbeing at the forefront of most acquisitions and are prepared to pay for buildings that can offer these.
The out of town market has seen a strong third quarter with take up of 116,903 sq ft. With 9 deals crossing the line the average deal size for this market has increased to 7,484 sq ft, and shows a promising return of larger deals, albeit the largest of these were both on a freehold basis to owner occupiers. The largest of these was the freehold sale of 62,011 sq ft at 2630 Aztec West to Rheinmetal, followed by the sale of 37,682 sq ft at Brightside Park to Gympanzees.
Rents in the out of town market have remained stable, but of note in this market is the comprehensive refurbishment of CEG’s 1000 Aztec West which is on track to complete later this year and will provide a net carbon zero HQ building with wellness as the key focus and it is expected to set new headline rents.
Andrew Hardwick, Director at Carter Jonas commented “The take up figures are a snapshot of the key themes in the Bristol market at the present time which include the “flight to quality” with the letting of the 4th Floor of EQ to Evelyn, the emergence of fitted space as a subset of the market with the letting of the 2nd Floor at 10 Temple Back but overall slow trading conditions. There are deals in the pipeline, but they are slow to convert.
Against a very challenging backdrop for business parks the out-of-town market has held up very well with take up close to the 10 year trend and the sale of 2630 Aztec West to Rheinmetal underlining the importance of the defence and aerospace sectors”.
CBRE’s Office Agency Director Richard Kidd added; “Whilst take up in Q3 in the city centre market was down on the quarterly average there is still a positive level of occupier activity and we fully expect a number of significant deals to complete prior to the end of the year. The market still has low availability of high quality space and due to this we predict that prime rental levels will also be increased within the next quarter. There are also positive signs for the business spark market with increased numbers of enquiries starting to come through”.
