Lower take-up of office space in Bristol – Jones Lang LaSalle
Take-up of office space in the centre of Bristol and in the Clifton area last year was 22% below the five-year average, at 425,289 sq ft, says Jones Lang LaSalle. The stock of available office space in Bristol centre remains at around 16.5m sq ft, while out-of-town stock comprises 5.5m sq ft, the firm notes. The highest city headline rents remain at £27.50 but incentives are very competitive, the firm says, enabling some occupiers that would otherwise only have considered better-quality secondhand space to take space in Grade A buildings in Bristol.
There was one pre-let deal in central Bristol during 2011, with 26,300 sq ft acquired by CMS Cameron McKenna, and there was no speculative construction on site last year in the city centre, JLL notes. The firm, which says enquiry levels have remained modest and “have no pattern”, expects the take-up of central Bristol office space this year to be at a similar level to 2011, at between 425,000 sq ft and 450,000 sq ft.
JLL says the take-up of office space by finance, banking and legal occupiers in central Bristol last year was encouraging, given the major closures in these sectors. There were no public-sector transactions during 2011, whereas in 2010 the public sector accounted for 10% of take-up: “It is clear that the public sector tap has been turned off,” the firm says.
Take-up of secondhand stock is very much price-driven, JLL notes, with 86% of secondhand deals recorded at rents of £16.00 per sq ft or less. The firm notes that Axa pulled out of a 70,000 sq ft acquisition at a late stage and instead renewed on a group of poorer-quality buildings in and out of town, in a blow to confidence for larger transactions. But on a brighter note, there were several new occupiers to the Bristol area that took space last year.
The main enquiry so far this year is from Mapfre, which is focusing on Bristol for its 50,000 sq ft requirement. There is about three years’ supply of Grade A stock in central Bristol, JLL says, but this is spread across seven buildings of varying age and quality. The firm considers that speculative development is unlikely this year, but notes that developers are positioning themselves for an upturn. There is considerable supply of secondhand space and some of this is likely to be converted to alternative uses such as hotels or student accommodation.
Out-of-town Bristol office space also saw lower activity levels in 2011, with take-up of 272,756 sq ft coming in 17% below the five-year average. There were no pre-lets out of town last year and nothing is currently under construction. JLL forecasts take-up of around 300,000 sq ft this year. Headline rents have fallen from the £23.50 achieved in 2010 to around £20.00-£21.50, and incentives are generally slightly lower than for the city centre. JLL feels that out-of-town schemes will need refreshing and reinventing as 25-year headleases from the 1980s expire, but says the core business parks will continue to attract demand, given their strong location and broad occupier base.
