Bristol’s office market saw prime headline rent rise by 3.6% in the year to June 2015, according to a new report by JLL, against a backdrop of sustained occupier demand and a tight supply of new space.
The report also showed that Bristol’s city centre investment market saw the strongest quarter since the first three months of 2011 with £107.2 million transacted.
Ian Wills, director in office agency at JLL in Bristol, said: “Sustained levels of occupier demand combined with the decreasing availability of Grade A office supply has contributed to a year-on-year increase in prime headline rents in the Bristol offices market with rents predicted to rise further in the second half of the year.”
The average increase in prime headline office rents was 4.3% across the Core 8 markets* over the past year.
According to JLL’s research report office take-up in Bristol reached 159,840 sq ft in quarter two; bringing the mid-year total to 266,000 sq ft and on track to exceed the 5-year average.
Wills added: “Grade A take-up was modest during the first half of this year with just 50,000 sq ft transacted across eight deals but we expect to see more significant Grade A activity in the second half with major deals expected to complete this year including Babcock, Foot Anstey and EDF Energy.”
The falling supply of good quality office space remains a key theme across the Core 8 markets according to JLL. The overall vacancy rate for Bristol was 6.4% – the lowest among the Big Six cities – with the Grade A vacancy rate at 1.4%.
Investment activity in Bristol was dominated by the off-market sale of Templeback for £58.5million and the sale of 66 Queen Square on behalf of Skanska to Aviva for £32.7 million.
Olly Paine, director in capital markets at JLL in Bristol, added: “H1 2014 saw a continuation of the strong investor demand for regional offices that characterised 2014. We have continued to see yield compression in the main Core 8 markets including Bristol with the best example of this being the 66 Queen Square deal at a yield of 4.94%. There continues to be strong investor demand as further opportunities come to the market.”
