GVA’s latest Big Nine report analysing the office occupier markets of the nine key UK regional cities, reveals that the UK has achieved its highest quarterly take-up total on record, assisted by Bristol’s own strong activity.
Professional and business services have dominated city centre activity in Bristol, which has seen the highest quarterly take-up for 2017. As a result, this has reduced both prime and secondary stock levels, aided by the lack of new build and large number of conversions to alternative use.
It is not surprising therefore that the city has witnessed the setting of a new headline rent at £30.50 with Mewburn Ellis’ 13,300 sq ft pre-let at Cubex and Palmer Capital’s Aurora building.
Furthermore, the recently completed 58,500 sq ft refurbishment at One Cathedral Square is already rumoured to be under offer, with Dyson and the University of Bristol reportedly taking two floors each. A further refurbishment under construction is Programme, an exposed-services fit-out that will deliver 50,000 sq ft this year and 70,000 sq ft next year.
According to the Big Nine report, total take-up of offices in Bristol city centre in Q3 was 173,022 sq ft, compared to a five year quarterly average of 155, 080 sq ft. Out-of-town, Bristol has seen 134,456 sq ft of space taken-up, compared to a five year quarterly average of 75,143 sq ft. The strong out-of-town market is encouraging for the largest ever speculative refurbishment, 72,000 sq ft at 800 Aztec West, which completes in the spring.
In the twelve months to the end of August 2017, GVA transacted on 38 deals in Bristol, which is understood to be the highest number of all Bristol agents. In this period, GVA disposed of 248,726 sq ft of space in the city, bolstered by the sale of St Augustine’s Courtyard to the University of Bristol, and a 35,117 sq ft let at 31 Great George Street, also to the University.
Elsewhere in the UK, four milestone lettings to the Government Property Unit have lifted take-up to the highest quarterly total on record during Q3. Comprising more than a million sq ft of new lettings and representing almost half of city centre take-up for the quarter, the deals in Cardiff, Leeds and Liverpool are the largest in their cities ever and Birmingham’s is the largest in a decade. Coupled with the significant GPU deal in Q2 in Edinburgh, these blockbuster lettings mean that total city centre and out-of-town take-up for the year is expected to rival the levels witnessed at the peak of the market in 2015, over 9 million sq ft.
GVA’s Richard Kidd says: “It has been a strong quarter of office take-up in both the city centre and out of town markets, not just in Bristol, but across the UK, showing the continued strength of demand. We have seen a long-anticipated increase in city centre headline rents in Bristol achieved at the Aurora building at Finzels Reach and believe that headline rents may well increase further in the coming months for both new build and refurbished space.
“The challenge that we face in the city is a shortage of future space and this may well have an impact on occupiers looking to locate or expand in Bristol.
“We are also expecting to see an increase in serviced office demand, following the level of activity witnessed in London. There is an increasing shift in the way occupiers are looking to use space more flexibly as attitudes and technology change, with more co-working space requirements for the expanding knowledge sector as well as more traditional occupiers.”