Bristol is bucking the national UK trend, recording above-average city centre offices take-up in the second quarter of the year, according to Bilfinger GVA’s latest Big Nine Report.
Despite the national figure showing a 3% fall below the five-year quarterly average, Bristol, along with Cardiff, Birmingham and Glasgow, experienced a strong second quarter this year.
Bilfinger GVA’s Big Nine Report highlights that office demand remains strong in Bristol city centre, with the second quarter of 2016 maintaining its high level of take-up at 185,000 sq ft, a third above its five-year quarterly average.
The key deal in Q2 was Direct Line purchasing the freehold of The Core in Thomas Street, at 63,000 sq ft. This has been supported by a handful of deals between 5 and 10,000 sq ft. OVO Energy has also taken 23,000 sq ft in Temple Back, in addition to their main office in Temple Quay.
Three sites have been shortlisted for the 170,000 sq ft plus HMRC/DWP potential pre-let requirement in Bristol, with CEG’s Aspire and AXA’s Assembly Bristol among the options. There are 2 other city centre requirements in the 20-30,000 sq ft size bracket and a handful of active 10 – 15,000 sq ft requirements.
Richard Kidd, Director at Bilfinger GVA says, “The number of new requirements coming to the market slowed in the run up to the referendum but now the dust is beginning to settle we are starting to see overall activity in the market gradually beginning to come back. Crucially the majority of occupiers who were in the process of taking new office space prior to the referendum appear to be pressing ahead with their plans which is a positive sign for the market.”
The city’s headline rents for city centre stand at £28.50 per sq ft although this will increase to £30 per sq ft this year with the prelet to Arup at Redcliff Wharf. Out of town prime rents stand at £21.00 per sq ft.
Nationally, despite the market uncertainty fuelled by the referendum, overall take-up figures have held up well according to Bilfinger GVA. City centre total take-up amounted to 1.22 million sq ft (3% down as previously highlighted), whilst out of town take-up covered 0.79 million sq ft, 4% down on the five-year quarterly average. At £23.80, net effective headline rents increased by 4.9% over the year to Q2 2016. The Big Nine average headline rent rose 3.1% since Q2 2015 to £27.78, and the average rent free period dropped from 22 months this time last year to 20 months this time round.