Surge in demand for out of town commercial property but lack of supply still an issue
Demand for Bristol’s out-of-town office market has picked up significantly, with take-up in the first half having surpassed levels for the whole of last year, according to leading property consultancy JLL.
Steve Lane, senior surveyor at JLL in Bristol, expects the market to see the highest amount of take-up in square footage in 2014 since 2001.
But he warned that a lack of supply could hold the market back in 2015.
In an out-of-town market update for Bristol for the first half of 2014, JLL reported that take-up for the first half of this year totalled 220,000 sq ft – 35 per cent higher than the five-year six-monthly average.
Thirty nine transactions over 1,000 sq ft – of which six were more than 10,000 sq ft – took place in the first half of 2014.
This was double the figure for the same period in 2013.
Recent notable deals have included: TSB’s commitment to take just under 64,000 sq ft at Key Point, which will complete later this year; and Broadcom taking a 10-year lease on 25,230 sq ft at 910 Aztec West.
Mr Lane comments:“It is very encouraging to see a marked uplift in demand in Bristol’s out-of-town office market, which has been very subdued for the last few years.
“The challenge now will be a lack of stock to meet the increased demand, particularly given the fact that there are currently no out-of-town schemes under construction in Bristol.”
He added that he predicts out-of-town take up this year will exceed 400,000 sq ft, exceeding both the five and 10-year averages (284,000 sq ft and 304,000 sq ft respectively).
Mr Lane comments further: “There is huge scope for office refurbishment projects in this marketplace; 740 Aztec West, for example, is undergoing a major revamp at the moment, which is good timing as it will be able to service some of the demand.
“The 740 Aztec West project will also encourage other landlords and developers to consider similar schemes once they see its success.”
While there is currently 143,000 sq ft of new or ‘never occupied’ space available, there is no true Grade A space, said JLL.
Meanwhile, JLL’s office market update also showed that first half take-up of the Bristol city centre office market was slightly better than that of the same period last year.
Take-up for the first half of 2014 totalled 295,350 sq ft, which was well ahead of the five-year average.
There were 71 deals of more than 1,000 sq ft in the first half of 2014, representing a 45 per cent increase on last year’s figures.
There were four deals over 10,000 sq ft, which is double last year’s figure.