Shortage of prime office space is having an increasing impact upon the Bristol market, a commercial property expert has warned.
James Preece, national offices director in the Bristol office of Colliers International, said that recently published figures for office take-up during the first half of 2016 indicated low levels of Grade A stock were creating greater pressures than ever before.
“Vacancy levels in Bristol are at an all-time low, and the only office building under construction in the city is the 95,000 sq ft speculative mixed use office and retail development, Aurora at Finzels Reach by Cubex, which is not expected to be delivered until late in 2017,” he said.
“Total availability is down 17% on H1 2015, with Grade A availability down marginally on H1 2015 levels. Grade B availability levels have fallen the most as occupiers are realising their requirements in non-Grade A space.”
Mr Preece said the last Grade A space delivered in Bristol city centre was 66 Queen Square, of which now only 3,500 sq ft is available. The largest Grade A deal during H1 was EDF Energy taking 81,000 sq ft at Bridgewater House, part of the Finzels Reach development.
“The lack of Grade A supply assisted in pushing up Grade B take-up levels to an impressive 240,000 sq ft, equating to 63% of all deals in H1 2016,” he said.
“This was 36% higher than in H1 2015. The largest individual Grade B deal being that of Direct Line which purchased 63,000 sq ft at The Core in Q2.”
He added that shortage of prime space had stimulated refurbishments at a number of city centre office buildings – notably at One Redcliff Street, where Colliers International advised the building’s owner last year in one of central Bristol’s largest single office lettings in recent years for the letting of around 90,000 sq ft to law firm TLT.
Prime Grade A rents in Bristol remain at £28.50 per sq ft, while quoting rents continue to edge up to £32.50 per sq ft. Top Grade B rents range between £19.00 and £25.00 per sq ft.
Mr Preece added: “Limited supply has resulted in the Bristol office market going from a tenant market to a landlord market.
“The demand for space remains strong, with a good level of significant sized requirements actively seeking high-specification centre city offices. As with many other regional markets, HMRC has the single largest requirement of more than 170,000 sq ft.
“With prime city centre supply being so low, there is still pressure on rental levels. We expect that prime Grade A rents will reach the elusive £30 per sq ft in 2016.”
