Market snapshot

Office Market Pulse Bristol Q4 2014

A bumper Q4 for both city centre and out of town take-up pushes the annual total to well over both the five and ten year averages, whilst the continued success of PDR continues to diminish city centre supply. Find out what this means for the Bristol market as we enter 2015.

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:

Bumper Q4 for both city centre and out of town take-up

City centre take-up reached 401,235 sq ft this quarter, pushing 2014 take-up to a total of 836,858 sq ft, which is well over both the five and ten year averages (both circa 530,000 sq ft).

The largest deal was take-up of 1 Rivergate at Temple Quay by Ovo Energy (69,716 sq ft) which, along with a number of other significant deals, helped increase the average deal size in 2014 to just under 6,000 sq ft.

Although there were also a record number of small deals in the market, this year it was Grade A space which had the majority of take-up at 44%. This result was achieved by a number of large deals rather than a single exceptional one, which has been known to distort above average take-up figures for previous years.

Out of town also had a good quarter, seeing the highest Q4 take-up figures since 2010, although at 91,649 sq ft it was the lowest performing quarter this year.

The total 2014 out of town take-up was 429, 676 sq ft, the highest since 2001 and up on both the five and ten year averages (both circa 320, 000 sq ft).

The largest out of town deal was the 63,858 sq ft taken by TSB at Keypoint which has major positive impacts on the Almondsbury area.

For a detailed breakdown of Q4 2014 take-up by grade, please click here or on Chart 2 to the left of this article.

Grade A city centre stock set to run out in next 12 months

PDR has continued to diminish the city centre supply, with over 225,000 sq ft of stock being converted to residential in 2014. This trend is set to continue into 2015 when big schemes, such as 33 Victoria Street, will commence on site.

Despite the widespread success of PDR, supply as a whole still looks to be balanced with 18 months worth of space currently available (using the five year average take-up figures).

When taking the Grade A market in isolation there is a different story, despite current figures suggesting a balanced supply. Once the 70,000 sq ft currently under offer with EDF at Bridgewater House is off the market it leaves only 15 months supply. Furthermore, of this supply only three buildings are capable of offering over 30,000 sq ft of grade A space.

Given the current activity in the city centre, and the fact that it will take at least two years to build anything new, this means we could be running out of Grade A space within 12 months.

 Out of Town there remains an over-supply of poor quality stock with only two options for good accommodation of over 20,000 sq ft.

For a detailed breakdown of Q4 2014 availability by grade, please click here or on Chart 1 to the left of this article.

Key Bristol office lettings, Q4 2014

Property Size (sq ft) Landlord (s) Tenant / Purchaser
1 Rivergate, Temple Quay 69,716  Telereal Trillium    Ovo Energy
Keypoint, Almonsbury 63,858 CBRE Global Investors TSB

Ground & 1st Floors, 740 Aztec West

38,534 Private

Alcatel-Lucent

One Linear Park, Bristol 26,000 PWC as Administrators DNV

Prime rents have risen with Grades B & C predicted to follow suit in 2015 off the back of a return in market confidence

City centre Grade A rents have risen this quarter to £28.50 per sq ft. Grade B & C rents have remained stable but with confidence making a return to the market these could finally increase in 2015.

Out of town rents have remained stable with good quality accommodation achieving £18 – 24 per sq ft.

For a detailed breakdown of Q4 2014 prime rents, please click here or on Chart 3 to the left of this article 

 

Q4 rounds off a strong year of investor interest

Q4 2014 saw significant investment in Bristol and the south west, rounding off a strong year of investor interest in the region. Over £1.5bn was invested in commercial property in the region in 2014, a 14% increase on the previous year.

Overall there has been strong institutional investment across all sectors in the region, with a strong weighting in retail. The first quarter of this year will see more investment reported in the region.

In Q4 some of the deal headlines in Bristol were:
LaSalle Investment Management placing £33.5m in a 301 bed student scheme on King Square Bristol;
Black Rock investing £30m in the RAC call centre at Aztec West.

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

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Peter Musgrove

0117 914 2013

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Peter Musgrove
Director - Head of Office - Bristol

0117 914 2013

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