Bristol office market ends 2024 with record regional rents and increasing pressure on supply

The Bristol office market ended 2024 with the highest recorded rents in the regional markets and increasing pressure on supply. Though take up of space was below the 5 and 10 year averages for the year it was an increase on the level for 2023 and with strong levels of occupier demand towards the end of the year market sentiment going into 2025 is positive, reports the Bristol Office Agents Society.

Bristol’s city centre market saw 41 deals complete in the second half of 2024 and a H2 take up of 187,527 sq ft. This gives a total annual take up in the city centre for 2024 of 440,562 sq ft.

In the city centre, H2 saw three deals in excess of 10,000 sq ft, the largest of which was BLOCK’s acquisition of 21,235 sq ft at the newly refurbished The Fairfax, demonstrating continued demand from the serviced office sector in the city, whilst the other two were at UBS’s newly refurbished 3 Rivergate, with Aecom’s move to 15,124 sq ft on the 6th and part 5th floors, and DNV taking 11,261 sq ft on the 4th. Other Grade A lettings this quarter include CBREIM’s letting at Halo of 9,504 sq ft to Softcat, Mazar’s move to 7,821 sq ft at AXA / Bell Hammers Assembly C, and CBRE acquiring 7,309 sq ft of space for themselves at CEG’s EQ.

All of these occupiers have followed the trend of trading up to high quality buildings which are amenity rich space and have strong ESG credentials. Headline rents in the city increased through 2024 to £48.00psf which is the highest of the big 6 cities and has been established as the norm for new buildings. The lack of good quality space has also positively impacted on comprehensively refurbished buildings which in many instances are achieving rents in excess of £40.00psf.

Several new build schemes completed in 2024, including CEG’s EQ, Trammell Crow and Tristan Capitals’ Welcome Building and AXA / Bell Hammer’s Assembly Buildings B & C all of which have secured significant pre-lets. However, beyond these buildings there are no new schemes under construction with the only major construction works ongoing are comprehensive refurbishment schemes including APAM’s One Friary, CEG’s Crescent and Abrdn’s Queens Quay.

With no other speculative development on site there will be increased pressure on longer term supply.

The Bristol out of town market saw 13 deals cross the line through the second half of the year to give a H2 take up of 54,773 sq ft. The largest of these was the long leasehold of 13,075 sq ft at 23 Clothier Road to Outcomes First Group. As with the city centre this is below the 5 and 10 year averages however the outlook for 2025 is much more positive with two large requirements expected to sign to take space in again best in class new space in the first half of 2025, setting new record rents for the out of town market which should give confidence to landlords and developers to bring forward more new stock, which is needed in this market.

Andy Smith, Office Agency Partner at Knight Frank commented “An election year always has a negative impact on levels of take up as businesses often put moves on hold due to the uncertainty surrounding a new government and 2024 was no different. However, even in this challenging market there were a number of significant deals, and occupiers continued flight to quality saw rents rise from £42.50 per sq ft at the end of 2023 to £48.00 per sq ft by the end of 2024. As we start 2025 there has been a marked uptick in new enquiries both in and out of town which reflects an underlying improvement in occupier sentiment and a slightly less uncertain political and economic outlook for the year.”

Chair of the South West OAS, and Lambert Smith Hampton’s Office Agency Director Roxine Foster added; “2024 proved to be a year of mixed fortunes, however the outlook for 2025 is positive and with pressure on supply becoming more and more evident it will be interesting to see which the next schemes are to start on site. Tenants are willing to pay for high quality space, and along with a flight to quality that has been discussed over recent years, we also expect to see a ‘fright to quality’ moving forwards as tightening standards on energy efficiency force landlords and tenants to upgrade their space.”