We are at the beginning of the most exciting boom period of growth I have seen.

Jo Davis

Jo Davis

With successful universities that support the research, media, technology and knowledge based industries, a focus on the green economy, and a strengthening professional services sector, the commercial property market in Bristol has a feeling of optimism about it.

At a seminar held recently to launch a new report, The Future of the Bristol Property Market, together with a new development map of the city, commercial property adviser Bilfinger GVA outlined how this air of optimism has been fuelled by improved occupier demand and a seemingly insatiable appetite from institutional, private and overseas investors.

Investment volumes rise

Total investment volumes for Bristol city centre offices so far in 2015 are already twice that of 2014 at £220 million, compared to £108 million for the whole of 2014.

Guests at the seminar heard that there is still a considerable weight of money looking to invest in prime Bristol offices and with an increasingly positive sentiment towards the occupier market and predicted rental growth, Bilfinger GVA is expecting the current high levels of demand for Bristol offices to continue for this year and well into 2016.

Significant shift

Richard Howell, Investment Director at Bilfinger GVA in Bristol writing in the report, comments: “There has been a significant shift in prime Bristol office yields in the last 12 months, with prime yields now at 5.00% compared to 5.75% at the same time last year.

“The two notable transactions so far in 2016 at 66 Queen Square in July 2015 for £32.7 million, and Temple Back in June for £58.5 million have contributed to the Bristol office market looking an attractive investment opportunity as investors continue to eye the regional markets.”

Nick Sturge

Nick Sturge

Important economic centre

Jo Davis, Regional Senior Director at Bilfinger GVA told the audience: “Bristol is one of the most important economic centres in the UK. A product of this success sees Bristol as the only city in the UK with a decreasing aging population, acting as a magnet for young professionals.

“In response Bristol’s population is forecast to see strong growth, with a rise of circa 40,000 expected over the next decade, well above the rate projected for the South West region.

“Bristol has outperformed both the South West and the UK as a whole in terms of economic growth over the last decade. It is the only English core city where output per capita outperforms the national average.”

Jo continues: “However, to continue to prosper we must see development opportunities in the city move forward in tandem with occupier and investment demand.

“We are at a tipping point where demand is outstripping supply which could restrict the city’s ability in the short term to capture this economic growth trajectory.”

Regional office market

In the Future of the Bristol Property Market report, Bilfinger GVA Director Richard Kidd also talks about the regional office market:

“In Bristol, the office market has returned to more modest levels of demand with circa 400,000 sq ft let during the first half of this year. This follows an exceptional level of take-up in 2014, which totalled nearly 1.3 million sq ft.

“The most recent wave of speculative development in Bristol has now completed, and there is now a dearth of activity. Underlying demand for city centre space remains strong, and grade A space is rapidly diminishing, with only 185,000 sq ft now available. This is the equivalent of just one year’s average annual grade A take-up.”

Optimism

Nick Sturge, Engine Shed founder, had this to say about the report: “I think we are at the beginning of the most exciting boom period of growth I have seen.

“We need to ensure that the right location, style and flexibility of space is available as and when growing companies need it – be they home grown or relocating/investing in the city.

“We need to ensure the other pillars of the ecosystem are in place for businesses: funding, support and talent. At Engine Shed we are working on all those and are keen to work with the property industry on helping grow this great city-region.”

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