Following a subdued start to 2019, the Greater Bristol office market saw an uplift in take-up during the second quarter of the year, the Bristol Office Agents Society reports, with activity for the first six months of the year now just behind the five year average.
In total, the Greater Bristol market transacted 212,975 sq ft in quarter two, with the City Centre in particular enjoying a strong three months.
The city centre saw healthy levels of demand with more than double the number of deals seen in Q1. The area transacted 177,633 sq ft across 35 deals which is ahead of the 5 year average for this period. In addition to strong take-up the market saw a flurry of serviced providers taking space, with the largest three deals of the quarter all to serviced providers, and several smaller providers in the serviced sector also taking space. The largest of these was Clockwise’s purchase of The Generator Building, Finzels Reach from Cubex, which totals 30,611 sq ft, followed by Spaces taking 26,500 sq ft at Resolution’s Programme and Landmark Space’s expansion into a further 9,781 sq ft at One Temple Quay.
The market for more quirky space has also performed well with several tenants signing up for unusual suites; these include lettings at The Fermentation Building, Finzels Reach, St Stephens House and The Cigar Factory. Prime headline rents have remained stable at £35.00 psf and secondary rents are also performing particularly well, with good quality refurbishments and high quality quirky space achieving rents in the low thirties. Once new supply is brought to the market we expect to see further increases in headline rental levels.
In contrast, the out of town market saw lower than expected levels of take-up with a total of just 35,342 sq ft from 11 deals. This is less than half the 5 year average for this period and has been notably affected by a lack of larger deals. There were no deals over 10,000 sq ft and only one deal in excess of 5,000sq ft, which was Willmott Dixon’s acquisition of 8,067 sq ft at Eden House. Typically, the out of town market is predominantly made up of professional service occupiers or servicing contracts often linked to the MOD or other government bodies. However with continued economic uncertainties and concerns surrounding BREXIT, many of these contracts have been put on hold and this has led to reduced demand in this market.
Overall, the Bristol office market is in a strong position, with several speculative developments in the city centre and others in the planning pipeline. These developments are seeing good levels of interest and are understood to be in discussions with several parties, so we expect to see suites under offer by the end of the year. Whilst the out of town market is not seeing the same level of development, there are a number of high quality refurbs which are well positioned to meet occupier’s needs.
Richard Kidd, Senior Director of Office Agency at CBRE said: “Brexit appears to be causing some hesitation amongst companies considering a relocation, particularly in the out of town market where the aerospace and defense industries may be more exposed to international markets. However, the city centre remains resilient in terms of demand, and with limited supply we are still seeing increases in headline rents across the board.”
Burston Cook’s Finola Ingham added: ““Following a slow start to the first quarter of the year, take up is back on track, activity has picked up and quoting rents are increasing. Demand remains healthy for offices across Bristol city centre and Clifton, and whilst some might have expected more uncertainly in the market with Brexit looming, there is still a good level of demand for city centre offices”.