Refurbishment opportunities need to be exploited in the Bristol office market to meet a rising demand for Grade A space as the city awaits the next wave of development, according to leading property consultancy JLL.
Across the ‘Big Six’ office markets, Bristol recorded the second highest number of deals over 10,000 sq ft in 2014, 18 in total, surpassed only by Manchester, which recorded 28, JLL’s ‘Big Six’ office market report showed.
In terms of total take-up for 2014, Bristol came in third place at 870,000 sq ft, ahead of Birmingham, Leeds and Glasgow. Manchester and Edinburgh came in first and second place respectively.
Bristol recorded one of the lowest Grade A vacancy rates of the ‘Big Six’ markets at 1.1%. This compares to a 1.6% average across the core six markets outside London, the lowest level for 10 years and lower than the other three markets JLL monitors, namely London’s West End, City of London and Western Corridor.
Jeremy Richards, head of JLL’s Bristol office and head of national office agency for the firm, said: “Looking ahead, we expect demand for Grade A office space in Bristol to continue to rise.
“With businesses in London faced with rising costs and the prospect of an undersupply of office space over the next three to five years, we expect to see a growing number of relocations – or part-relocations – to Bristol. Around 23 million sq ft of offices are needed in London, but currently just 10 million are being provided.
“In addition, Bristol will effectively be brought closer to the Capital by the electrification of the Great Western railway line and this will no doubt boost demand further.
“Bristol’s latest speculative development schemes, 2 Glass Wharf and 66 Queen Square, now have tenants for the whole or part so we expect the next wave of development to start. However, in the meantime, refurbishment opportunities need to be exploited to meet demand as these can be delivered more quickly than new schemes.”
Jeremy Richards added: “Landlords are now changing their quoting rents upwards; we’ve seen this in Bristol and anticipate it will become more common-place as market conditions continue to shift away from the occupier.”
2014 was the best performing year for the ‘Big Six’ markets, comprising Birmingham, Bristol, Leeds, Manchester, Glasgow and Edinburgh, with office take-up totalling five million sq ft. The volume of Grade A office supply remains the real pressure point across all of the ‘Big Six’ markets, added JLL.
According to JLL, 1,080 big 6 office transactions completed last year, a 25% increase compared to the previous year and there was a 43% rise in the number of deals over 10,000 sq ft in size. The report was launched at JLL’s annual ‘big 6’ office market seminar in London.
