The Cardiff office market recorded take-up of almost 105,000 sq ft during the third quarter of the year, the highest since the same period in 2012, report joint agents Ben Bolton, Director of Cooke & Arkwright and Mark Sutton, Associate at Knight Frank. This builds on a weak start to 2013 with the preceding quarters’ figures of 45,000 and 84,000 sq ft respectively. The growth in activity reflects improved sentiment in the commercial market as wider economic signs point to the start of a recovery.
Whilst commercial property may often be “first in and last out” in recessionary times, evidence of strong demand for good quality stock has remained throughout.
The two largest lettings of the third quarter were on behalf of our client AVIVA Investors at Cardiff Waterside in the 3 Assembly Square building. Totalling over 23,000 sq ft, the two high profile lettings to the Life Sciences and ITV cement the building’s credentials as one of the most desirable in the city and it remains the only one to achieve Cardiff’s headline of £22 per sq ft.
With continued demand for these top quality buildings, we are confident that the one-and-a-half floors remaining in the building will be let quickly in a market with little new supply.
Companies looking for similar stock will shortly be forced to consider signing up for building pre-completion in developments announced in Callaghan Square or Central Square, which are due in mid 2015, or new bespoke options in Cardiff Waterside.
Based on these figures and our forecasts for the year, we expect a performance below the long term average for the city, of half-a-million sq ft per annum. It is now looking more likely to be around 350,000 sq ft which is disappointing against a backdrop of greater optimism from occupiers.
Cardiff’s main pressure in the short term will be supply of new high quality stock in the interim period before new development starts coming on line. Cardiff is not unique in these circumstances as development has been stifled by successive years of weak occupational demand and downward pressure on effective rents, after negotiated discounts and large incentive levels are taken into account.
With Cardiff poised – and able – to develop several thousand sq ft of new office space between land at Cardiff Waterside and the recently announced schemes in the city centre, it is better placed than many other regions to attract new large inward investment into Wales and further ensure the city’s most established occupiers remain.