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Bristol city-centre office take-up totalled 540,910 sq ft in 2021, up 7% from the year before. The out-of-town market has proved restrained over the same period, with take-up totalling 215,000 sq ft, 16% down year-on-year. That brought the total take-up figure to 755,000 sq ft, which was marginally below that of 2020 and 14% down on the 10-year average.
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In the largest deal of the year, the University of Bristol agreed to take 74,000 sq ft at 1 Trinity Quay in December. The deal eclipsed the BBC’s 60,251 sq ft lease at Bridgewater House in June. Highlighting the increased desire for high-quality sustainable space, Arup took 27,315 sq ft at the EQ development in December.
Prime city centre headline rentals have risen to £42.50 per sq ft. Despite several high specification developments under construction, we expect upward rental pressure moving into 2022, as occupiers are prepared to pay a premium for the very best space. In the out-of-town market, quoting rents at Aztec West have risen to £27.50 psf, from a current headline level of £23.00 psf, again principally due to the lack of available product. Incentive packages remain relatively stable, typically with 12-18 months rental equivalent for 5-10 year terms.
Although stock remained limited throughout 2021, a number of new build and refurbishment schemes will complete this year and in 2023, which will deliver much needed high-quality stock. Construction is underway at CargoWork at Wapping Wharf, totalling 21,000 sq ft, with completion due this year, whilst the Halo building is also due to complete with two floors still available. In addition, CEG has EQ under construction comprising 200,000 sq ft in the city centre, while the 189,280 sq ft 4 Glass Wharf broke ground in the latter part of 2021 and is due to complete in 2023.
Overall market fundamentals are sound and the market will remain in balance. However, in line with the national trend and the changing role of offices, active requirements have typically fallen by 10-20%. Legal firms have fallen by more due to automation advancements in various specialist areas, although they remain significant occupiers within the city. The serviced office market continues to spawn city centre requirements albeit most are seeking management agreements.
The office investment market remains active with a total of £363.2 million completed in 2021, broadly in line with the 10-year average, while prime city-centre office yields have remained firm at 4.75%. The scarcity of supply has also driven a raft of medium-sized owner-occupier sales over the last year, a trend that looks set to continue.
The industrial and logistics market has proved highly active during 2021. COVID has brought demand from a vast range of occupiers including packaging, medical supplies, chemicals, home office equipment, home improvements, building suppliers, and the food and beverage sector.
Take-up in 2021 exceeded 2 million sq ft, 14% above the previous year. Four transactions of over 100,000 sq ft have been recorded in 2021:
316,128 sq ft was let to Amazon at Western Approach, Avonmouth
DFS Trading leased 244,591 sq ft at the recently refurbished H240 Hercules in Cribbs Causeway
Central Approach, Severnside, totalling 107,650 sq ft, was pre-let to Oxford Instruments
Third Avenue, Westfield Industrial Estate at Midsomer Norton, totalling 125,434 sq ft, was acquired by Dickies, the warehouse and road haulage operator - a good example of a haulier moving into warehouse storage.
Availability is now extremely limited, and developers are actively considering schemes, with several land deals in hand. Land values now stand at £450,000 per acre for consented sites as evidenced by Tungsten paying £440,000 per acre for 25 acres at Avonmouth.
There are no speculative single units above 100,000 sq ft except the 1.3 million sq ft unit Mountpark XL in Avonmouth. The developer, Mountpark, acquired the 58-acre site just before the pandemic, trying to capitalize on the market’s tight conditions.
The key feature of the market remains a growing lack of stock, and the shortage of development sites is a constraint in locations other than Avonmouth. As a consequence, upward pressure will continue to be placed on rental levels and land values. We anticipate that the sector will continue to flourish as the fundamentals remain favourable.
Commercial
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