Construction work is to start on two much-needed speculative Bristol city centre office schemes as demand for prime space continues to outstrip supply.
Royal London is beginning work at The Distillery – part of the Glassfields scheme on Temple Way – which will provide 92,000 sq ft of flexible space.
Meanwhile on the opposite side of the road, AXA and Bellhammer have said they will start speculatively developing Building 1 of Assembly Bristol – a grade A building of 200,000 sq ft, pictured – before the end of the year. 
Both schemes have been in the pipeline for several years but, despite the availability of city centre office space dwindling to an all-time low, their developers have not gone ahead with construction.
That left the only speculative building – Aurora at Finzel’s Reach – more than 85% let ahead of its recent completion.
As a result, grade A city centre office rents have soared to new highs with software developer Amdaris, currently based on the Bristol & Bath Science Park at Emersons Green, lined up to take 3,200 sq ft in a self-contained ground floor for a record £34.50 per sq ft. Grade A office rents have now risen by around 25% in less than two years in Bristol city centre.
Latest figures from Bristol Office Agent’s Society released this week also show the strongest quarterly demand for the year to date, with take-up for the Greater Bristol market in the third quarter of the year at 283,458sq ft.
Following a good first six months, demand remained strong in both the city centre and out of town markets, it said.
Third quarter city centre take up was 166,829sq ft – the largest quarterly take-up for the year to date and ahead of the five-year average.
Four deals completed during the quarter were in excess of 10,000 sq ft – the largest being Parmenion Capital’s acquisition of 31,233 sq ft of the third and fourth floor at Aurora.
Other major deals in the centre included the letting of Unum House (28,732 sq ft) to Desklodge, Maggs House (23,103 sq ft) on Queen’s Rd to Bristol University, and HM Revenue and Customs taking 13,817 sq ft of additional space at The Crescent Centre.
Supply levels now remain low across all grades, particularly in the grade A market, where a further 46,235 sq ft was taken up during the quarter, leaving supply levels at an all-time low.
Phil Morton, of Morton Property Consultants, pictured, said: “Following a strong first nine months, there is every indication of a positive last quarter – to make 2018 a year when a lot of negative market expectations because of Brexit were overturned.
“The record rents being achieved against a background of low supply and strong demand have helped spur on new development, and that will release much-needed new quality stock into the system. Bristol is riding out the economic uncertainty, helped by a broad-based economy and a sound supply and demand situation – allied with many sectors here doing extremely well… not least TMT [telecoms, media and technology] which is driving a lot of the activity.
“Everywhere you look there are clear signs that Bristol occupiers and developers have turned their back on Brexit and are focusing on business as usual.”
Chris Meredith, Savills’ office agency director, added: “Both the Bristol city centre and out-of-town office markets continue to go from strength to strength in terms of both take up and rental growth. The city centre has experienced several large lettings this quarter alongside the usual steady pace of sub 10,000 sq ft lettings, providing a boost to the figures. The established business parks out of town continue to attract new occupiers with the third quarter seeing several large deals, pushing volumes to reach over 100,000 sq ft.”
Bristol’s out of town office market also performed well in the third quarter, according to the Bristol Office Agent’s Society, with a total take-up of 116,629 sq ft. The market benefited particularly from a number of larger deals, five of them above 10,000 sq ft.
The largest of these was Edvance’s acquisition of 30,670 sq ft at the newly refurbished 800 Aztec West. Others include IVC taking further space at The Chocolate Factory in Keynsham (16,931 sq ft), Renishaw taking 1 – 3 Ashville Park (10,418sq ft), the NHS acquiring Park House (10,042 sq ft) and BUPA taking Severn House (10,000 sq ft).
