LSH has released its second annual South West and South Wales Office Market Report highlighting some significant trends and opportunities for Welsh cities.
There is a tangible sense of confidence and optimism in Cardiff and HMRC’s decision to pre-let 265,977 sq ft at Central Square makes it the largest ever office deal in Wales and the largest outside London in 2017.
This is just the latest chapter of success for the Central Square scheme which is now in excess of one million sq ft and which has shifted the central office core away from the north east of the city centre and towards the mainline interchange.
“The impact Central Square has had on the property landscape in the capital has been remarkable,” comments Steve Matheson of LSH, “it is important to remember that it was a speculative development, facilitated by Cardiff Council, which acted as a catalyst for the whole city. Rates are now attracting £25 per sq ft and new builds could even command £30 if the quality is right.”
LSH have noted that development has even driven up prices for refurbished B grade space and the momentum looks set to continue. “Speculative builds like Central Square are about more than bricks and mortar. It has driven confidence and that can prove priceless for sustained regional regeneration.”
Close neighbour Newport has long stood in the shadow of the capital but with news of the reduction and planned abolition of the M4 toll, plus a pending announcement that the M4 relief road will be built, there is a sense that the city could capitalise on its geographical position.
“There are clear opportunities for Newport, this could be a critical time for the city,” says David Jones of LSH. “There is no Grade A stock available and the centre has the potential for massive improvement.
“With the Severn Bridge Toll scrapped in 2018, now is the time to build as its geographical location, cheaper labour and occupational costs means Newport will be a viable alternative to Cardiff and Bristol.”
Whilst Swansea does not have the geographical advantage of Newport, the city is being transformed by the impact of its two universities.
“The population of Swansea and Trinity St David’s Universities is expected to rise from 20,000 to 30,000 students over the next few years,” comments Tom Rees of LSH, “a number of schemes have been put forward to build accommodation for over 2,500 student rooms but ambitions should not stop there.
“Swansea can learn from Cardiff. Local Authorities can indeed act as a catalyst, freeing up real estate for developers. Central Square is proof that if you build it, quality tenants will come. Allowing the commercial sector a stake in the long-term vision is what matters. Mumbles has already hugely benefitted from Oyster Wharf, a private sector initiative which opened last year and which has attracted high quality restaurant tenants. There is no doubt that it has dramatically boosted visitor numbers.
“We may be far from London but we can turn that to our advantage. Right now, supply of Grade A space is the lowest it has been in over a decade. But by freeing up the land for development as Cardiff did, Swansea can be a city in an outstanding location, with a highly educated workforce and first-rate leisure facilities.”