The South West commercial property market defied ongoing uncertainty last year to deliver another strong performance across the business space arena.
Property consultancy Alder King, in its latest market report, said occupier demand for office and industrial space and developer demand for land remained robust, with many businesses looking beyond short term challenges and pressing ahead with their plans for growth.
Industrial take-up across the region was buoyant at 4.2 million sq ft, an increase of circa 8.5% on the same period last year, boosted in particular by some significant transactions in Bristol, Gloucester, Newport, Plymouth and Swindon. However take-up was held back due to the lack of good quality, immediately available supply and the continuing loss of consented sites to alternative uses.
Office take-up reached 1.74 million sq ft, broadly in line with the five year average. The Bristol office market performed particularly strongly, recording circa 940,000 sq ft of take-up, with AXA’s 200,000 sq ft pre-let at Assembly being the stand-out deal of the year.
2019 saw stock levels boosted by the completion of a number of speculative office and industrial schemes, but much of this development pipeline has already been taken up by ‘early raiders’.
Further speculative development will commence this year in several centres including Bristol, Exeter, Gloucester, Bath, Bridgwater, Plymouth and Swindon. However speculative development takes time to deliver and so in the short to medium term, the market remains constrained by a lack of supply, driving up rents and capital values.
A number of locations saw new headline rentals set in the industrial market in Bristol, Bath, Swindon and Taunton. Office rental levels also increased in Bristol, Plymouth and Taunton and further upward pressure in both sectors can be expected this year.
A lack of opportunity dampened activity in the region’s investment market but there were some notable transactions and it continues to be a very attractive market in which, given the opportunity, investors will look to invest. Bristol recorded £658 million of transactions, up 56% on the previous year, with the freehold sale of Temple Quay House reported to be the largest transaction of 2019.
The residential development land market remains competitive, with particularly good demand for sites in all South West cities and also towns close to motorway junctions.
Simon Price, senior partner at Alder King, says market sentiment is high. “The decisive outcome of last year’s general election has given much-needed clarity and confidence to the market and the outlook for the coming year is positive.
“However, occupiers and investors will find the market highly competitive and will have to plan much further ahead to satisfy their requirements, particularly when considering lease end and break options.”
