Professional services and tech firms moving into high-quality buildings that reflect their ethical values helped push office rents in Bristol to a new high last year while increasing pressure on a dwindling supply of A grade space.
Property agents in the city say occupiers are increasingly willing to pay for top-notch space with strong sustainable credentials and employee amenities as the ‘flight to quality’ gathers pace. 
However, this year they also expect a ‘fright to quality’ as tightening standards on energy efficiency force landlords and tenants to upgrade their space.
The trends are highlighted in the 2024 annual report from the Bristol Office Agents Society, which said last year ended with the city recording the highest rents in the UK regional market.
Though 2024’s take-up was below the five and 10-year averages, it was an increase on 2023’s and, with strong occupier demand towards the end of the year, market sentiment going into 2025 is positive, the report says.
Forty-one city centre deals were completed in the second half totalling 187,527 sq ft, giving a total annual take-up for the year of 440,562 sq ft.
Three second-half deals were in excess of 10,000 sq ft – the largest, co-working space provider BLOCK’s acquisition of 21,235 sq ft at the newly refurbished The Fairfax, demonstrated continued demand from the serviced office sector in the city, according to the report.
The other two were at UBS’s newly refurbished 3 Rivergate, with global engineering group Aecom’s move to 15,124 sq ft on the sixth floor and part of the fifth, and quality assurance and risk management company DNV taking 11,261 sq ft on the fourth.
Other Grade A lettings included IT support firm Softcat’s move to 9,504 sq ft in Halo at Finzels Reach, Mazar’s relocation to 7,821 sq ft in AXA/Bell Hammers’ Assembly C on Temple Way, and CBRE acquiring 7,309 sq ft of space for themselves at CEG’s EQ on Victoria Street, pictured.
All these occupiers followed the trend of trading up to high-quality buildings which are amenity rich and have strong ESG (environmental, social and governance) credentials.
Headline rents in the city increased through 2024 from £42.50 to end the year at £48 per sq ft – the highest of the Big Six cities. Agents say this price has now been established as the norm for new buildings.
The lack of good quality new space means some comprehensively refurbished buildings are now achieving rents above £40.00 per sq ft.
The report says several new-build schemes completed last year, including EQ, Trammell Crow and Tristan Capitals’ Welcome Building (formerly 4 Glass Wharf) at Temple Quarter, and Assembly Buildings B & C, secured significant pre-lets.
Despite this, there are no new schemes currently under construction – the only major building works underway are comprehensive refurbishment schemes such as APAM’s One Friary at Temple Quay, CEG’s Crescent and Abrdn’s Queens Quay on Queen Square.
With no other speculative development on site there will be increased pressure on longer-term supply, the report said.
In the out-of-town market 13 deals crossed the line in the second half totalling 54,773 sq ft.
The largest of these was the long leasehold of 13,075 sq ft at 23 Clothier Road to education group Outcomes First.
As with the city centre, this was below the five and 10-year averages, the report said.
However, the outlook for this year is much more positive, with two large requirements expected to take best-in-class new space in the first half, setting new record rents for the out-of-town market.
This should,, says the report, give confidence to landlords and developers to bring forward more new stock, which is needed in this market.
Knight Frank office agency partner Andy Smith said: “An election year always has a negative impact on levels of take-up as businesses often put moves on hold due to the uncertainty surrounding a new government and 2024 was no different.
“However, even in this challenging market there were a number of significant deals. As we start 2025 there has been a marked uptick in new inquiries both in and out of town, which reflects an underlying improvement in occupier sentiment and a slightly less uncertain political and economic outlook for the year.”
Lambert Smith Hampton office agency director Roxine Foster, who is also chair of the South West OAS, said 2024 had proved to be a year of mixed fortunes.
“However the outlook for 2025 is positive and with pressure on supply becoming more and more evident it will be interesting to see which the next schemes are to start on site,” she added.
“Tenants are willing to pay for high-quality space, and along with a flight to quality that has been discussed over recent years, we also expect to see a ‘fright to quality’ moving forwards as tightening standards on energy efficiency force landlords and tenants to upgrade their space.”
