New figures released for the third quarter of the year show that office space take-up in 2016 has already surpassed last year’s total take-up, according to property consultancy JLL.
Take-up of city centre office space is now at 515,000 sq ft for the year to date compared with a total of 490,000 sq ft in 2015. City centre take-up for quarter three was 134,408 sq ft.
Hannah Waterhouse, director at JLL’s office in Bristol, said: “2016 is set to be a strong year for Bristol’s city centre office market. The fundamentals of the office market, namely diminishing supply and high demand from a wide range of occupiers, are standing the city in good stead despite political and economic uncertainty.
“It’s encouraging to see that the EU Referendum vote hasn’t yet affected occupier demand. There are several significant deals under offer which could make the final quarter of 2016 one of the strongest we have seen for several years and so there is good reason to feel optimistic at this stage.
“Also of note is the wide variety of occupiers and types of space taken up. This is good for Bristol and shows the city attracts and can accommodate a range of organisations which helps support a resilient economy that is not over-reliant on any one sector. As well as occupiers relocating from within the city, we have also seen some inward investment which is another positive message.”
Only two deals in Q3 were for Grade A space – OVO Energy which took just over 23,000 sq ft at Templeback and RPC which has taken 6,550 sq ft at Temple Circus. However, the availability of Grade A space is at an historically low level at 70,000 sq ft. Another additional 95,000 sq ft will become available in 2017 when the Aurora building at Finzels Reach completes, but apart from that there are no other speculative schemes on site.
Hannah added: “Many developers feel it is too risky for them to build speculatively and so we will continue to see limited Grade A space in the market. We expect the trend for refurbishments to continue, such as the ongoing work to upgrade and update Spectrum on Bond Street and Temple Point on Redcliffe Way. We will start to see more pre-lets as well, which allows the tenant to agree to lease a building before construction has started. This becomes common when occupiers cannot find what they need from the space currently on the market.”
Take-up in the out of town office market is at 197,000 sq ft for the first three quarters of 2016, which indicates that figures for the full year will fall just below the five year annual average of 295,000 sq ft. The quarter three figure of 61,656 sq ft was marginally up on quarter two’s 60,603 sq ft.
Hannah said: “Again, we are seeing a good mix of occupiers and locations being taken up but there remains an undersupply of space. In fact, availability of quality space in out of town locations is at its lowest since 2008. We are likely to see a rise in demand for out of town locations as a result of Hinkley Point and we expect to see more speculative refurbishments over the course of next year as a consequence.”
