Total office take-up for Cardiff in 2012 was 17 per cent down on the long term average, according to a new report from Knight Frank.
In its latest Regional Office Market update Knight Frank said the final quarter of 2012 was the quietest of the year, with total take up of 374,839 sq ft. Grade A space accounted for 54 per cent of the total, while Grade B offices accounted for 30 per cent.
Mark Sutton, associate at Knight Frank said that headline rents had remained static over the quarter, with prime rents at £22 per sq ft in Cardiff Bay and £21 per sq ft in the city centre. “Due to the lack of availability of Grade A stock and the likelihood of this decreasing further we expect to see a further hardening of incentives in the first half of 2013.
“We typically see a flurry of deals towards the end of the year in the office market but this didn’t materialise last year.”
The largest transaction of the final quarter of 2012 was the letting of the remaining 12,767 sq ft Fusion Point II to Involegal (part of Hugh James Solicitors). Other significant deals included Grade A city centre lettings at 3 Callaghan Square (7,333 sq ft) and 6 Park Street (8,190 sq ft).
Mark Sutton added: “The availability of Grade A space is becoming a real issue for occupiers. With less than 150,000 sq ft available in total in the city centre, Cardiff Bay and out-of-town, occupiers aiming to secure new space in 2013 will need to act fast to secure premium space. Supply is very tight in the city centre in particular, with less than 50,000 sq ft currently available.
“The demand for top quality accommodation is reflected in the early success of the speculative redevelopment of 18 Park Place in the city centre, which already has strong interest in the ground, first and second floors which is due to complete early in 2013.”
The Knight Frank research reports that active named requirements rose for the fifth successive quarter to reach 320,000 sq ft in Q4, with the BBC still to make a decision on its 140,000 sq ft relocation. L&G has a requirement to potentially relocate 50,000 sq ft in the city centre, while the possible relocations of solicitors Morgan Cole (35,000 sq ft) and Geldards (40,000 sq ft) remain live.
Mark Sutton said: “Looking ahead, construction has started on the centre for creative industries at Porth Teigr in Cardiff Bay. The six-storey building is scheduled to deliver 40,000 sq ft in early 2014 and is set to become a hub for the creative sector.
“Work on the 80,000 sq ft Number 1 Capital Quarter – the major speculative scheme in the city – is progressing well and you will have noticed the change to the city skyline in 2012 as the frame was completed. The cladding and glazing works have now commenced and throughout the coming months occupiers will see the city’s newest Grade A office building really taking shape.”
He believes that despite the dip in take-up, the outlook for the Cardiff office sector remains reasonably positive. “Considering the overall economic background in Wales, the UK and Europe we shouldn’t be too surprised that these figures fell below the long term average. With a lack of prime office space, incentives hardening and new Grade A stock now coming out of the ground we can look ahead to an interesting 2013 for the office sector.”