What has driven the record year for Cardiff’s office space take up?

Property & Construction | Reports | Surveys | Wales
Gary Carver, Savills Cardiff

The Cardiff office market could be set for a record year of take up with levels potentially exceeding the 675,000 sq ft recorded in 2016.

According to new research from Savills, take up already hit 567,505 sq ft in the first three quarters of the year.

The 269,228 sq ft pre-let deal by the Government Property Unit (GPU) at Central Square significantly boosted take up notes Savills.

Other notable deals include the 11,000 sq ft letting to Aon Benfield at 2 Callaghan Square and Cardiff University taking 8,000 sq ft in Friary House.

The public sector has been driving demand in 2017 accounting for over 60% of office space take up.

Savills notes that the sector could again underpin 2018 through two requirements; the NHS seeking 25,000 sq ft and the GPU potentially activating a requirement for in excess of 100,000 sq ft.

There are also several requirements from companies looking for space over 10,000 sq ft, expected to progress in 2018.

The average deal size in the market this year has been 8,225 sq ft, however Savills notes that when the GPU deal is excluded this takes the average size down to 4,386 sq ft.

The bulk of the deals in 2017 were by smaller and medium sized businesses, something that is expected to continue into 2018 with the below 5,000 sq ft group expected to be the most active.

Supply in the market is at its lowest level since 2007 with only 1.1 million sq ft available according to the firm. This represents a decrease of 13% from 2016 levels.

Looking to 2018, this lack of stock could hamper take-up from increasing as there are currently only eight buildings that can accommodate requirements above 20,000 sq ft in the market.

Top rents remain static at £25 per sq ft and Savills forecast that this level will remain until a pre-let is agreed on a new building in Central Square or Central Quay, or a sub 5,000 sq ft suite is sub-let within One or Two Central Square.

Gary Carver, director in the business space team at Savills Cardiff, comments: “This year has been another strong one for the Cardiff office market, driven by the GPU’s pre let at Central Square. The majority of deals in 2017 have been to companies already based in Cardiff, either expanding or contracting, with most of this churn witnessed in the sub 5,000 sq ft bracket.

“Although Cardiff is currently limited by a lack of stock over 20,000 sq ft and a shortage of larger, Grade A space there will be significant pre-let opportunities in 2018 in developments such as Central Square, Central Quay and John Street.

“Looking ahead, we expect transactional activity to continue at a good pace, albeit take up is likely to be lower than the past two years. The city centre is still likely to be the focus of the majority of companies looking to relocate.”

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