Market snapshot

Office Market Pulse Bristol Q1 2014

City centre take-up in Q1 of 2014 is lower than average but numerous deals in the pipeline indicates a return in occupier confidence, with demand being driven by businesses seeking additional space for expansion, in addition to the normal lease-event driven churn.

You can download a PDF version of this Bristol Office Market Pulse, or to read and sign-up to receive Office Market Pulses from other UK centres, click here.

In this issue:

City centre take-up in Q1 2014 was lower than average, in contrast, out of town figures are up on ten year average

Take-up in the city centre in Q1 was at 115,722 sq ft which is 19% below the average Q1 take-up for the last five years. 

There has been a lack of large deals, with the quarter’s biggest transaction being the 16,500 sq ft letting to HSBC at Redcliff Quay. However, there are numerous deals in the pipeline for Q2 which bodes well for the year to come.

With the improving economic climate increasingly leading to occupier confidence, demand is being driven by businesses seeking additional space for expansion, in addition to the normal lease-event driven churn.

Out of town take-up was particularly strong at 69,061 sq ft; well ahead of Q1 last year, which totalled 27,043. However, with half the take-up accounted for in just two deals, this may not translate into full year figures.

For a detailed breakdown of Q1 2014 take-up by grade, please click here or on Chart 2 to the left of this article.

Purchase of office stock for conversion continues to decrease supply

Supply continues to fall in the city centre, with more under-performing buildings being taken out of the market for residential use. This is especially apparent for grade B/C buildings, where availability has fallen to 692,380 sq ft.

Two new office buildings are under construction and will bring grade A space to the market in late 2014/early 2015.

Grade A supply continues to fall as tenants upgrade accommodation. Total stock in the city centre is currently at just over 300,000 sq ft.


For a detailed breakdown of Q1 2014 availability by grade, please click here or on Chart 1 to the left of this article.

 

 

Key Bristol office lettings, Q1 2014

Property Size (sq ft) Landlord (s) Tenant / Purchaser
Ground Floor Redcliff Quay 16,500 M&G HSBC
Part 5th Floor Bridgewater House  5,917    Cubex BDO
Part 4th Floor Portwall Place

4,014 Blackrock BNP Paribas
Part 4th Floor Linear Park     3,437  PWC  Simmons and Simmons
 910 Aztec West    25,230  Royal Sun Alliance  Broadcom
Highwood Pavilions  24,582    NHS

Q1 rents remain steady

Out of town, prime rents have remained at £20.50 whilst prime city centre rents are still at £27.50.

2014 is likely to see a decrease in incentives, especially for grade A space. We anticipate demand in this sector will increase in line with the improvements in the economy.

2014 may also see upward pressure on rents in line with the continued decrease in available stock.

For a detailed breakdown of Q1 2014 prime rents, please click here or on Chart 3 to the left of this article.

Investment yields drop below 6% as lack of supply drives up values

The Paragon: a 76,000 sq ft office building with ground floor retail, was sold by Invesco in March 2014 for £29.5m - a 5.93% yield - to Lothbury Property Trust. 

St James Parade: Kames Capital purchased this 36,650 sq ft office building for £4.6m (11.9% yield) in February 2014.

Orchard Street: 23,000 sq ft serviced offices in Clifton sold above quoting level of £2.2m, achieving £2.3m (8.70% yield) in January 2014.


To view our latest UK Investment Transactions (UKIT) report, please click here.

Want more information about this Snapshot?

Peter Musgrove

0117 914 2013

Email me

Regions

Contact us now

Peter Musgrove
Director - Head of Office - Bristol

0117 914 2013

How can we help?

Submit