Market snapshot

Office Market Pulse Bristol Q4 2016

The Bristol city centre office market outstripped expectations in the final quarter of 2016, with transaction levels reaching almost double those of the previous quarter. Take-up reached 267,239 sq ft in Q4 2016, compared with 134,408 sq ft in Q3 2016.  This robust demand has led to continued pressure on supply in the city centre, and we expect to see development in the near future.

The out of town market also performed well in Q4, exceeding historic take-up levels during the period and seeing twice the level of take-up compared with Q3 2016. While there is more availability in the out of town market, there is a lack of available Grade A space and we anticipate Permitted Development Rights (PDR) starting to take effect in this market soon with the removal of obsolete stock further shrinking supply levels.

City centre take-up almost reached the record levels seen in 2014; however, this can largely be attributed to HMRC’s pre-let of 107,000sq ft at Salmon Harvestor’s 3 Glass Wharf, which was the most significant deal of the year.

In our view, the UK’s decision to leave the EU has still not affected occupational take-up in the region, although we wait to see if this may change when the process for leaving the EU is announced in the coming months.

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In this issue:

Enquiry levels up for larger suites

  • There were 40 new office enquiries in Q4 2016, compared with 41 in Q3. Of these enquiries, 18 were for suites of more than 5,000sq ft.
  • The number of requirements for larger suites has increased and several have been out viewing available space, although their choice is limited.

With no new office stock being brought to the market, firms seeking 10,000 sq ft plus are finding that their options are narrow. There are few remaining buildings able to offer floor plates in excess of 10,000sq ft, and just one in the city centre that can offer grade A space over 30,000sq ft.

Robust take-up in final quarter

  • Total take-up of offices (over 1,000 sq ft) in Q4 2016 was 267,239 sq ft, compared with just 93,604 sq ft during the same period in 2015.
  • Total take-up has exceeded the five year average.

A stand out performance in the city centre has seen take-up for the year increase dramatically when compared with 2015. The letting of 107,000sq ft to HMRC at 3 Glass Wharf is the key deal for this quarter and the most significant transaction for the year.  There were just three other grade A deals in Q4 2016: 2 Glass Wharf, The West Wing Glass Wharf and 31 Great George Street.

This activity represents an increase in the number of prime deals compared with previous quarters, but with supply being taken out of the market and only one building currently being built speculatively, we expect to see shortages in the coming months.

The grade B city centre market has also seen increased levels of take-up with several deals of over 10,000 sq ft, including lettings at South Quay House, Redcliff Quay and the purchase of Victoria House for owner occupation.

The out of town market has also performed well this quarter, and exceeded the total take-up figure of 2015, with a total of 308,380 sq ft. There were two key deals of more than 30,000 sq ft in this market, including the letting of 100 Bristol Business Park to Babcock.  This site has recently been acquired by Abstract Land which is committed to redeveloping the existing 80,000 sq ft building to create more than 150,000 sq ft of space.  This is due to be pre-let to Babcock. The other key letting of 30,430sq ft was to Highway England at 930 Aztec West.

In our view, the UK’s decision to leave the EU has still not affected occupational take-up in the region, although we wait to see if this may change when the process for leaving the EU is announced in the coming months.

Key occupational transactions


Size (sq ft) 

Landlord(s)/ vendor


Rent/Price   Lease
3 Glass Wharf


Salmon Harvestor


 £28.00psf 25 years
31 Great George St



University of Bristol

 £26.00psf 15 years with 10 year break
100 Bristol Business Park


Abstract Development


 Confidential 3 year lease
 930 Aztec West 30,430  Threadneedle UK Property Trust  Highways England  £20.00psf  10 year lease with 5 year break

Source: Lambert Smith Hampton

Supply profile shrinks further

Construction of 95,000 sq ft of Grade A office space at Cubex’s Aurora, as part of the wider Finzel’s Reach scheme, is now well underway with completion expected by the end of 2017. This is the only new build scheme which is being built speculatively and one of just two schemes able to offer more than 50,000 sq ft of Grade A space this year.  The other scheme is the refurbishment project which is underway at Castleforge’s One Cathedral Square, which totals 53,000 sq ft and is due to complete in May 2017.

Several refurbishment projects that completed in 2016 have performed well, with many achieving deals on space quickly and strong interest shown in the remaining space.  Schemes such as these have brought much needed supply to the market and they have reaped the rewards, with high rents achieved for the grade B market and low incentives.  Buildings refurbished to a good standard are now achieving rents in the mid twenties which is not far behind grade A rents.

The TMT sector remains popular in the city centre market with buildings such as One Brunswick Square and The Programme receiving good levels of interest. However, deals on this type of ‘quirky’ space are yet to get across the line so it is difficult to tell where rents for this market will lie.

Prime rents did not break the £30.00psf barrier by the end of the year, with prime headline rents remaining at £28.50psf for the city centre.  However, this will soon increase to £30.00psf when Arup signs its deal to take new office space at Redcliff Wharf;  the deal has been agreed subject to planning and is expected to complete later this year.

Bristol offices in demand from investors

Bristol offices remain at the top of investors’ shopping lists, with a high level of demand for assets in the £5m to £20m bracket.  This is due the strong occupational market, low supply level and low passing rents in comparison with other large regional cities. Although quality and location are key, pricing continues to be stimulated by the strong demand for permitted development and the subsequent removal of obsolete office buildings from the market. The wider economic uncertainty is also sharpening demand for prime locations and assets with secure income and, for this type of product, prices are expected to remain stable, given the high level of demand and low supply.

Investors remain cautious about secondary assets where there has been a discount in pricing. The continued uncertainty over the potential of a ‘hard Brexit’ may cause markets to price-in too much risk, which could, in turn, lead to pricing opportunities in the most exposed sectors.

The final quarter of 2016 saw only one city centre property come to market, which was Whiteladies House, Whiteladies Road, Bristol.  The property was being marketed for £3.6m (7.02%) by  Aviva and was purchased for £4.15m (6.08%) by Savills Investment Management.  We understand there were approximately 10 bids with three parties bidding over £4m, reflecting the demand for Bristol office investments.

We understand Salmon Harvester/NFU Mutual have sold their next development site 3 Glass Wharf to L&G, off market, at the end of 2016 following the agreement of a new 25 year index linked lease to HMRC.  The annuity investment of 115,000 sq ft is rumoured to have sold for £75m (3.75% - sub4 %). 

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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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