Avison Young releases its latest Big Nine regional office market update

2 Trinity Quay, Bristol

The occupier market has remained robust in Bristol during 2020 with the city faring well compared to other cities in Avison Young’s latest quarterly Big Nine office market update. Covering Q4 2020, total activity for the Bristol city centre and out-of-town markets amounted to 775,000 sq ft, around 13% below the ten-year average in both markets.

However, this compares to a national figure of 5.6million sq ft across the Big Nine cities, that’s 33% down on the ten-year average and the lowest annual figure since the Global Financial Crisis. Whilst this represents the severe impact of the pandemic, Bristol however, alongside Newcastle, has displayed particular resilience.

Bristol’s healthy performance was enhanced by some exceptional deals earlier in the year (74,000 sq ft to Osborne Clarke at Finzels Reach and 132,000 sq ft to Babcock at Bristol Business Park) as well as 170,000 sq ft of activity in the city centre during Q4. This included key deals to DAS UK at Trinity Quay (37,828 sq ft) and Jacobs UK Limited (35,291 sq ft) at One Glass Wharf.

“While several requirements have downsized and been delayed since the summer, we are aware of substantial requirements that are still active in the city centre, including 50,000 to 60,000 sq ft to BBC Studios, which we understand to be under offer,” explains Paul Williams, Director, Avison Young, Bristol. “This contributes to the resilience we’ve seen in the city over the last twelve months, putting Bristol in a strong position for recovery post-Covid.”

On the supply side there has been a major boost to the market as CEG has started on site with its 184,000 sq ft EQ development. The scheme has strong environmental credentials and large amounts of space devoted to health and wellbeing.

In addition, the speculative 92,000 sq ft Distillery at Glassfields and the 201,000 sq ft 1 Assembly (fully pre-let by BT) are both due to complete during the first half of the year. One Portwall Square and Halo at Finzels Reach are also due to complete later in 2021, with just under half of the total 150,000 sq ft still available.

Headline rents remain at £35.50, although higher rents have been achieved on a small number of sub-10,000 sq ft lettings. However, rent-free periods have started to move out.

Nationally, activity improved in Q4, with take-up amounting to 1.5 million sq ft, 25% down on the ten-year average but higher than the previous quarter and double the amount transacted during the spring lockdown in Q2.

Headline rental levels have largely sustained throughout the pandemic and in some cases increased as landlords have held firm, although there is some evidence that rent-free periods have moved out slightly.

Paul Williams continues, “During an unprecedented time of uncertainty for the office market, there were some encouraging signs of activity towards the end of the year. The markets have seen a number of significant pre-letting deals and on the supply side several speculative schemes across Bristol, Leeds, Manchester and Newcastle have started on site, totalling 900,000 sq ft.”