GVA’s latest Big Nine report, which examines the office markets in the nine major cities in the UK, reveals that Cardiff has recorded one of the strongest Q3 performances, being one of just four cities to achieve well above average take-up.
The Big Nine report outlines that significant prospective deals in the pipeline, such as the design and build for BBC Wales at Central Square, are likely to act as a catalyst for further occupier activity in the final quarter of the year.
Across the nine major cities studied, there were continued high levels of take-up during Q3, indicating total take-up during the first three quarters of 2014 is higher than it has been over the same period for the previous five years, with the market now in a position to eclipse 2013’s strong performance. The strongest activity was in Glasgow with over 200,000 sq ft of deals.
At 109,174 sq ft, take-up in Cardiff is well ahead of the five-year quarterly average of 82,404 sq ft. The recent deal at Portcullis House, which has seen the Velindre NHS Trust take 36,200 sq ft, was highlighted in the Big Nine report as the second largest city centre deal to complete in Q3 amongst the nine cities studied, which include Manchester, Glasgow, Birmingham and Bristol.
Cardiff also recorded one of the top five out-of-town deals, with Wales and West Housing taking 20,357 sq ft at Llanishen.
The highlight of the quarter has been the agreement of the BBC’s long-standing requirement for relocation from LLandaff to the Council / Rightacre’s site at Central Square. The deal is a 150,000 sq ft design and build, on a 20-year lease, three years rent-free and at a rent in the region of £21 psf. Rightacres will start on site this autumn and is expected to complete in 2018. The scheme will also include 20,000 sq ft of offices for solicitors Blake Morgan, which will complete two years earlier.
Tom Merrifield, Head of Agency at GVA in Cardiff, comments: “The level of occupier activity is underpinning decisions by a number of funds to move into the regional city development markets during 2013 and this is clearly now paying dividends with much of the new Grade A space being let at or before completion. There are still a number of cities where new speculative development has yet to commence in earnest, though the positioning of developers and funds to move forward with key sites in each city is continuing to gather momentum.
“What we have not yet seen is much pure speculative forward funding and this still remains difficult to achieve, except where the occupational story is absolutely solid. The continued high levels of take up and our analysis of future demand within the core city centres will begin to change this.”