Bristol city centre office market overview – H1 2018

At the half year the Bristol city centre market is on a par with the 10-year average (272,844 sq ft) for take-up with 272,484 sq ft of office space transacting, as outlined in JLL’s Bristol city centre office market overview.

Three deals have dominated the city centre market at over 20,000 sq ft. In Q1 Immediate Media, an existing Bristol occupier, took on 34,612 sq ft in Eagle House to become self-contained. In Q2 Runway East, a serviced office operator, sub-let 30,148 sq ft in 1 Victoria Street. The long leasehold / freehold market has proven particularly liquid with 11 deals, totalling 47,169 sq ft, which equates to 17.5% of total take-up for the period.

Supply has eased marginally since 2017, with the vacancy rate increasing from 3% of total standing stock to 4.5%. With Aurora now complete, new Grade A standing stock is now available on the market contributing, along with some ‘grey’ tenant space, to a 200,000 sq ft increase in supply since the end of 2017. The commencement of construction at Royal London’s Distillery site represents the first speculative office development for a number of years. Regardless of this progress, Bristol remains the tightest of all the Big 6 markets. In rental terms the market remains buoyant at £32.50 per sq ft and is expected to increase in H2 of 2018.

Investor appetite for Bristol is strong despite the markets experiencing quieter first six months due to a lack of stock. 1 Rivergate sold for £27.6m and was the only openly marketed office that transacted in H1. It received a high level of investor interest. Prime yields are hardening towards 5% and key off market deals included the sale of Bristol House (£12m) and Castlemead. The outlook for H2 is positive with a number of sales including Imperial Brands Global Headquarters located on the edge of the city centre due to complete.