Bristol’s office market will be the first of any major UK city to recover, with an upturn in demand expected this year and an increase in rents for premium space.
However, a two-tier market is emerging with a large overhang of hard-to-fill secondary property which will keep overall rents down.
These trends emerge from the latest quarterly report on city centre and out-of-town office take up from property agents GVA. The research, which looks at UK’s nine leading regional city markets, shows a reasonable level of take-up in the second quarter of this year, although concern remains over the longer term.
The upturn in Bristol this year will be triggered by demand for grade A space exceeding supply. Manchester, Edinburgh and Glasgow will follow next year, according to GVA. While most demand in these cities will be met by existing space, they may be the first to see a return to development.
GVA says so few offices under development at present in Bristol that grade A supply continues to tighten.
Take-up in the nine cities researched for the report – Bristol, Manchester, Liverpool, Leeds, Edinburgh, Glasgow, Birmingham, Newcastle and Cardiff – totalled 1.59 million sq ft, which is similar to the three-year quarterly average.
Most of this – 1.1 million sq ft – took place in city centres, which was 9% above the historic quarterly average, although this was boosted by Admiral’s 215,000 sq ft scheme in Cardiff, and strong take-up in Leeds. Other positive signs were more inquiries in Bristol as good sized professional firms came back to the market, and the re-emergence of the financial and business service sector in Birmingham,
GVA’s head of office agency in Bristol, Ben O’Connor, said: “There is optimism that take-up figures for 2011 will be boosted by deals that are now looking well progressed – but in the longer term we are concerned that inquiries are thin.”
