Strategic real estate advisor Avison Young has released its latest quarterly Big Nine office market update, covering the second quarter of 2021.
According to the new report, enquiry levels in Bristol and viewing activity picked up in April and May to their highest levels for a year as restrictions were lifted. However, corresponding with the increase in caution surrounding the Delta variant and the Government extending its guidance to work from home, these levels slowed in June.
Paul Williams, Director at Avison Young in Bristol comments,
“We do expect to see an improvement in the depth of deals over coming months with the lifting of the formal work from home advice, although we also anticipate a phased return to office working. We know that office workers are keen to return for collaboration, team working and the social interaction side of office life, not to mention a change of scenery from the home office.
“We expect hybrid working to be the way forward though for many companies, as we are observing a number of professional services firms favouring a mix of both home and office working, and therefore looking to downsize their space requirements, with banks and lawyers most notable. Across the UK, professional and financial services, which usually contribute 35% of offices activity are down at 21%, reflecting this change in working practices. “
As a result, availability in Bristol is on an upward trajectory since its cyclical low at the end of 2019, although it remains less than half the 2012 high, meaning Bristol remains well placed to bounce back following the end of lockdown restrictions.
With 648,000 sq ft of space under construction – 44% of which is pre-let – this new supply coming through includes One Portwall Square and Halo at Finzels Reach, both of which will complete in the next few months. Completing in 2022 and 2023 are CEG’s 184,000 sq ft EQ development and the next phase of Assembly 92,000 sq ft Assembly C, Temple Way, which are now on site.
The market received a further boost with the recent announcement that Legal & General have agreed terms with Bristol City Council to invest £350 million in a major mixed-use development at Bristol Temple Island, and a public consultation is expected soon on the scheme that will include a conference centre, hotel, 550 new homes and two grade A office buildings.
By far the largest deal of Q2, was BBC Studios taking 60,251 sq ft at Bridgewater House, Finzels Reach – recently vacated by EDF. There were a handful of transactions around 5,000 sq ft, which included lettings to surveyors Hartnell Taylor Cook and recruitment consultant Sanderson in the city centre and Countryside Properties Limited at Harlequin Business Park.
Total take-up in the quarter amounted to 103,498 sq ft in the city centre and 33,259 sq ft out-of-town, 28% and 19% below respective ten-year averages, but positive in the light of the ongoing pandemic and high levels of working from home.
This reflects activity across country, where city centres have seen the most activity, accounting for 65% of all activity at 1.02m sq ft.
Total occupier activity across the Big Nine office markets amounted to 1.56 million sq ft during Q2, 26% down on the ten-year average, but in line with the post-Covid level of the last 12 months.
Paul Williams concludes,
“Many companies are still experiencing uncertainty over employees’ frequency of occupation and occupational densities, although the expectation is that space per employee will increase as wellbeing and the need to attract talent gain higher priority.”