The availability of oven-ready space is fundamental to the health of the Cardiff office market, and to enable the city to maintain its competitive edge.
So says a new city centre market report from independent property adviser, GVA, entitled Tipping Point. With grade A availability in the city standing at just approximately 60,000 sq ft, and robust occupier demand from organisations including Legal and General and the BBC Cymru Wales, the report calls for urgent office development to regain equilibrium.
“Whilst many other cities throughout the UK are imminently facing their tipping point, that is to say where Grade A take-up is greater than Grade A supply, Cardiff is already in a state of undersupply of prime space,” explains Ben O’Connor from GVA’s Cardiff office.
“Further development is therefore pressing in order for the Cardiff to steal a march on other cities, such as Bristol and Birmingham, where there continues to be limited construction. By so doing, Cardiff can meet the anticipated demand that is set to improve over the next couple of years,” continues Mr O’Connor.
Cardiff has witnessed significant levels of office development over the fast fifteen years, focussed south of the train station at Callaghan Square, Dumballs Road and Cardiff Bay. Despite construction falling sharply after the peak in 2008, it has picked up recently with the 200,000 sq ft pre-let to Admiral Insurance in the city’s traditional office core to the north. Due to the limited supply of Grade A stock, it was no surprise when JR Smart started their 78,000 sq ft speculative scheme at Capital Quarter, due to complete early 2014.
The existing available Grade A space in the city, combined with just a handful of new developments in the pipeline, mean restricted choice for those looking to relocate, and constrained opportunities for inward investment.
Mr O’Connor continues, “Looking forward, there is a healthy demand from existing occupiers looking to consolidate space at forthcoming lease renewal. The Welsh Government is also keen to attract inward investors considering more efficient, better specified and more sustainable city centre space, and well as occupiers looking to capitalise on Cardiff’s competitive staff and property costs.
“The Creative Industries Media Centre, together with Capital Quarter, the Rightacres site at Central Square, Callaghan Square phase 2, and the Admiral Insurance pre-let, remain the focus of Cardiff’s development.
“Yet there are a number of sites in and around the train station that could help resolve the situation and be brought forward over the medium term; sites at Capital Quarter and Cardiff Bay have infrastructure and are ready to go; others require more work before coming to market.
“The city is well placed in respect of sites with planning permission capable of delivering pre-lets, however, with occupier demand historically supply led, with many occupiers not having the time or foresight to consider pre-lets, the availability of oven-ready space is therefore fundamental to the health of the market.”
The report concludes that if Cardiff is to maintain and expand its currently thriving, mixed economy, and benefit from strong employment growth expected from the finance and business services sector over the next five years, balance from the city’s own 2011 tipping point still needs to be regained.