Creative services, TMT (technology, media, telecoms) and financial services were the three sectors that dominated the real estate market in Cardiff in 2019. In Avison Young’s Big Nine report, its analysis of regional office activity in Quarter 4 2019 revealed that these sectors accounted for a third of total activity each.
Overall take-up in the capital’s office market was subdued in the last year, totalling 357,000 sq ft, well below the ten-year average and the exceptional levels of activity seen in recent years. The largest deals were at the newly completed 4 Capital Quarter earlier in the year; 37,000 sq ft to Sky and 19,000 sq ft to Optimum Credit.
It was the out-of-town market in Q4 however that saw the key deals being signed – 9,000 sq ft to Defra and 6,500 sq ft to Sure Chill Ltd both at Cardiff Edge. In Cardiff Bay there was an 8,000 sq ft deal to business services provide Relx.
Tom Merrifield, Director at Avison Young in Cardiff observes,
“Very low levels of grade A availability have contributed to Cardiff reporting its lowest take-up in five years. However, the outlook for 2020 is positive with supply increasing substantially as work has commenced on the first phase of the Central Quay masterplan, the 220,000 Ledger building, as well as JR Smart’s development at John Street.
“These large-scale developments tend to attract strong anchor tenants who want to stake their claim in the city,” he says.
Total take-up across the Big Nine office markets (Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle) amounted to 8.8 million sq ft in 2019, 3% above the ten year average and comparable to 2016, a year that was similarly dominated by political uncertainty.
There is currently 5.8 million sq ft of space under construction across the Big Nine, 56% of which is already pre-let, underlining the ongoing appetite of occupiers in regional markets.
Investment volumes across the Big Nine cities totalled £559 million during the final quarter of 2019, down 2% on the ten-year average, while figures for the full year were up 12% on the ten-year average.
Mark Williams, Principal and Managing Director, Regional Investment, said:
“There is sufficient pent-up demand to suggest that the first half of 2020 will see increased activity from investors, before activity slows ahead of the Brexit deadline at the end of the year. The search for income has become increasingly challenging, and we expect investors to continue bidding aggressively for assets that offer long-term secure income with strong covenants – although the supply of such opportunities continues to diminish.”