Is the Bristol office market well-placed to weather the COVID-19 storm?
A strong start to the year in the Bristol office market has seen take-up dominated by the professional and financial services sectors, accounting for the top five deals in the city centre.
With take-up 52% above the quarterly average, its highest for ten years, the market is well placed to weather the current storm, according to Avison Young’s Big Nine report, its quarterly review of the UK regional office markets.
“Take-up figures reflect the healthy situation of the Bristol office market before the COVID-19 crisis,” explains Paul Williams, director at Avison Young. “Bristol saw one of the largest deals within the UK Big Nine markets with Osborne Clarke taking a 74,000 sq ft pre-let at Halo, Finzels Reach.”
With Avison Young representing the landlord, the largest standing stock transaction was at One Temple Quay, where Sanlam Life & Pensions took 20,365 sq ft.
Total take-up in the city centre amounted to 219,420 sq ft in Q1, with four further deals greater than 10,000 sq ft, including to engineering company WSP and lawyers Ashfords.
Q1 deals have moved headline rents to £35.50psf, and asking rents to £37.50 psf.
“The strong fundamentals in the market will likely provide an element of resilience during the current pandemic meaning it is well placed to recover when the lockdown is lifted, assuming a return to some form of normality over the next few weeks,” continues Paul. “Vacancy rates are low and 65% of the current stock under construction is pre-let.
“Occupiers are still trying to progress requirements that are well established, and there are some sizeable requirements in the market.”
The three speculative buildings under construction or about to start in the city total 237,000 sq ft. In addition to Halo, these include the Distillery at Glassfields where 93,000 sq ft is available, and also 1 Portwall Square, where the developers Nord have cleared the site, and are expected to start construction shortly.
The Big Nine also reports that Melburg and Angelo Gordon have received planning consent for their proposed refurbishment of the 110,000 sq ft South Plaza, which will include rebranding to 360 Bristol, and the provision of amenities such as a full-service gym, ’cycle in’ office access, cycling facilities, yoga studios, a café and a business lounge, with the aim of creating a unique product within the Bristol office market.
Total take-up across the Big Nine office markets (Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle) amounted to 1.96 million sq ft in Q1 2020, 8% below the quarterly average.
Paul concludes: “Activity is expected to be significantly down over the next months. The lockdown is not only creating uncertainty around pricing and occupational requirements but significant practical difficulties. Viewings and due diligence cannot be carried out and material for construction sites and fit outs will be delayed. However, several deals are progressing regardless, while others are taking a ‘wait and see’ approach, and we remain positive about prospects for the Bristol office market to recover quickly once the scientific advice allows for the present restrictions to be eased.”