Latest industry analysis from global real estate advisor Colliers International has revealed a sharp contrast between Bristol’s city centre and out of town office markets.
While overall take-up remained strong, totalling 154,000 sq ft, the out of town market was the major contributor to Q1 figures.
James Preece, National Offices Director at Colliers International in the South West and Wales, said strong out of town performance had bolstered the figures and even produced a new prime rent.
He said: “The first quarter of 2019 has started in the same vein as 2018 with a subdued level of office take-up.
“Despite encouraging levels of enquiries in the city centre the number of transactions that managed to complete was very disappointing. We believe this will improve as the year unfolds. New record rents will be achieved in the city centre as a result of low levels of supply.”
City centre take-up in Q1 totalled 58,000 sq ft, 53 per cent down on this time last year and 57 per cent down on the five-year average for Q1.
James Preece said: “There were 16 transactions during Q1, only one less than this time last year. The big difference is the fact there were no new deals between 5,000 and 20,000 sq ft.”
The largest deal in the city centre this quarter was Forrest Brown’s assignment of Ovo Energy’s 23,000 sq ft at Templeback.
“There was a highly diverse range of companies taking space in Q1 with no real dominant sector. Grade A rents remain at £35 per sq ft and Grade B rents at £28.50 per sq ft. Rent free periods are also stable at circa 1.5-2 months per year of term certain.
“We estimate take-up levels will increase as the year progresses, due to the level of enquiries in the market.”
Out-of-town take-up totalled nearly 96,000 sq ft in Q1, 200 per cent up on the same quarter last year and 29 per cent up on the five-year average for Q1.
James Preece explained: “There were only a couple more deals than this time last year, however three transactions were above 10,000 sq ft – one of which was in excess of 40,000 sq ft – compared to no deals above 10,000 sq ft at the start of 2018.”
The largest out of town deal of the quarter was St. James’s Place Partnership taking a lease of around 41,000 sq ft at Legal and General’s 2610 Aztec West.
Again, a variety of businesses took space in Q1, with no dominant sector.
“A new headline rent of £23 per sq ft was achieved at the newly refurbished 600 Aztec West. Grade B rents remain in the order of £14-£17.50 per sq ft on average,” says James Preece. “Incentives in the out of town market are in the order of 1.5-2 months per year of the term certain.”