The Cardiff office market has experienced an exceptional year of take-up, bucking the UK-wide trend which has seen sentiment decline markedly since the summer, according to GVA’s latest edition of The Big Nine – the quarterly regional office market review.
“It has been a quiet end to the year for Cardiff in what has otherwise been an exceptional year of take-up,” says Ben O’Connor, regional head of office agency for independent commercial property consultant GVA in Cardiff. “Take-up in the final quarter of 2011 stood at 48,111 sq ft, giving a total end of year figure of 560,000 sq ft, compared to 438,000 sq ft in 2010.
“This compares to Bristol, for example where the figure has fallen to 700,000 sq ft from 850,000 sq ft in 2010.
He continues, “Going forward, the lack of city centre stock indicates that rents should increase in 2012, although overall market confidence would suggest otherwise.
“With headline rents in Cardiff City Centre being quoted between £21.00 – £22.00 psf, but with few green shoots appearing and the bleak macro-economic outlook, it is unlikely that we will see any increases in headline rent on Grade A space.”
“The availability of 350,000 sq ft of Grade A stock across Cardiff, Newport and Swansea, which includes just 100,000 sq ft in Cardiff City Centre, leads to the creation of a two-tier market. With little development, grade A supply continues to tighten; secondary property remains in plentiful supply and small to medium sized transactions begin to dominate.
“There are some significant leases, originally taken out 15 – 25 years ago, coming up for renewal in the city over the next twelve months, adding to the potential availability of good quality, secondary stock, and a handful of larger, corporate occupiers who could move to new space in the foreseeable future.
“There are currently some excellent deals around, so for companies looking to move, then 2012 may be the year to do so as the same opportunities may not be there in 2013.”
Ben advises that occupiers should be looking out for incentives such as 24 to 36 months’ rent free on a ten year lease with no breaks or between 18 and 24 months’ rent free if a five year break is preferred. Cash-back contributions or a combination of cash and a rent free period are also being offered. Landlords are also considering capital contributions towards fit outs, such as carpets and floor boxes.
The Big Nine report, which reviews Q4 of 2011, highlights how city centre and out-of-town take-up in the nine GVA regional office centres recorded take-up of 1,526,000 sq ft. The out of town market made up 36% of this total, with 549,000 sq ft. The former was 4% down on the quarterly average with the latter 2% down.
For further information on GVA’s latest Big Nine report visit www.gva.co.uk/research