What's happening in the current market?

 

Spring 2017

 

COMMERCIAL PROPERTY MARKET OVERVIEW

Contrary to many fears following BREXIT, the UK economy grew faster than first thought in Q4 2016… GBP was up 0.7% q/q, not the .6 first advertised. There were helpful boosts from sharply higher exports, lower imports and extra government spending. The Monetary Policy Committees new forecasts show GBP growth of 2% for the UK this year.

At the coalface here at Burston Cook, we have certainly noticed a business as usual mentality and we have not seen any reduction in the level of enquires for commercial space and demand across all sectors remains healthy.

 

Offices

With the publication of the office take up statistics for 2016, office lettings and sales in central Bristol and Clifton, amounted to 782,940 sq ft (72,764 sq m) of which 5 major transaction made up circa 314,000 sq ft. Notably EDF Energy (81,000 sq ft), Frazer Nash (27,700 sq ft), Direct Line (63,000 sq ft), OVO Energy (23,207 sq ft), HMRC (107,000 Sq ft) and The University of Bristol (35,117 sq ft).

Take up of standing office stock in Bristol last year was the second highest for 25 years and it is reported the availability of Grade A space fell to the lowest level of any major regional city in the UK, falling to 52,000 sq ft by year end.  It is envisaged the shortage of stock will persist in the coming 12 months with only 95,500 sq ft of new space within Aurora at Finzels Reach together with circa 100,000 sq ft of refurbished office space being delivered in the coming 12 months.

Many of the office buildings taken out of the supply chain over the last three years or so and at the last count approaching some 1.5 m sq ft, have now been converted to residential or nearing completion which in many ways has been a welcome boost to the vibrancy of Bristol city centre. As occupiers here at the heart of BS1, we have noticed the city centre come to life over the last three years with a vastly increased residential population and the opening of numerous retail outlets and eateries at ‘ground floor level’. Demand remains strong for offices across Bristol city centre and Clifton and this has redressed the previous imbalance between demand and supply with a shortage in the supply of good quality office stock which has resulted in dramatic rent increases over the last 18 months or so. In some cases, refurbished second hand office buildings have seen their rents rise by as much as double over the last two or three years.  The highest rent achieved for new build Grade A offices in Bristol city centre remains at £28.50 per sq ft, although this is likely to hit £30.00 per sq ft within the next few months.  The very latest agreed based on lettings which are yet to complete.

Latest News

To perhaps help the dwindling supply of Bristol’s city offices, is the proposal for three mixed use buildings that could provide more than 400,000 sq ft on a site in Bristol’ Temple Quarter Enterprise Zone – If this scheme gets the green light this Spring, the first building comprising 250,000 sq ft could be completed within the next 18 months…  Watch this space…

 

Retail and Leisure

With our local retail presence and strong retail board profile, enquiries from traditional retailers and eateries are coming in thick and fast.

Clifton always attracts strong interest and Clifton Village benefits from 100% occupancy. Whiteladies Road has certainly experienced a change in fortunes over the last few years, having suffered significate vacancy rates during the recession.  Whilst there is always a degree of occupancy turnover, there is currently healthy demand from retailers and eateries. The lower end of Whiteladies Road, formerly known as ‘the strip’ which houses an array of cafes, bars and restaurants, has certainly ‘upped its ante’ with a more upmarket and eclectic mix of leisure operators serving a more discerning clientele than some ten years ago when its reputation was as a haunt for Stag Nights…

Park Street has received mixed reviews over the last 12 months or so, however, Burston Cook have been actively involved in the marketing of a number of units and have experienced good demand with recent lettings negotiated to Finisteere (at no 70) and to Bailey Nelson Opticians (at no 66).  Number 30 College Green at the foot of Park Street is currently under offer to a national retailer and we are shortly to commence marketing another prominent unit on the street for which interest has already been expressed.

Bristol’s Docklands remain sought after amongst occupiers, particularly restaurants and bars, however, the most recent success story has to focus on Cargo One, which is Bristol’s latest eating hub, serving both the residents of the Docklands and anyone who cares to pop down to visit!  Cargo 1 is unique to Bristol comprising a variety of adapted former cargo containers, housing an eclectic mix of independent eateries including amongst others, Pigsty, for whom we acted in securing them one of the final units.

The city's principle shopping centres of Cribbs Causeway and Cabot Circus continue to perform although with a degree of occupancy turnover to be expected, however, both remain popular principle shopping centres with steady occupier demand.

 

Industrial

The industrial property market throughout Bristol and the surrounding areas remains buoyant and active with a shortage in supply within certain sectors and good occupier demand.

Supply in general terms in Bristol remains low and is reportedly at its lowest level for over 10 years with demand increasingly focused on better specified space off all sizes, freehold opportunities accross all sectors and smaller business units of up to 2,000 sq ft, especially if available to purchase.

With an improving number of medium sized requirements, occupiers are increasingly only able to satisfy their needs via the design and build route. 

New space is strictly limited and we anticipate rental levels of circa £8.50 per sq ft (£91.50 per sq m) could now be achieved for accommodation below 20,000 sq ft (929 sq m).  Rents for modern and mid ranged buildings remain at around £6.50 per sq ft (£70 per sq m) and good quality second hand buildings are commanding rents of around £5.50 - £6.00 per sq ft (£59.20 per sq m - £64.57 per sq m). 

 

Investment

Although Bristol experienced a fall in investment volumes in the second half of 2016, the turnover for the year totalled £350m, 79 % above the 10 year average.  With foreign investment accounting for 17 % of investment volumes in 2016.

Whilst there was a degree of nervousness following Brexit, demand for commercial property investment in Bristol from property companies, trusts and high networth individuals returned to normal and coming in to Spring 2017 remains strong.  There remains a shortage in supply of smaller investments of up to £1m and property company investments up to £3m and due to our long established involvement in the Bristol market, we have managed to identify and secure a number of off market investment opportunities over the last 12 months.

Whilst one or two of the Institutions have adopted a little more caution, there remains healthy demand for institutional investments which again, remain few and far between.  One of the most recent major investment transactions in Bristol is the sale of 3 Glass Wharf let to HMRC on a ‘belt and braces’ 25 year lease with rents linked to RPI increases.  The purchase price reflects a net initial yield of 3.9 %.

Get in touch

We would welcome the opportunity to hear from you. If you would like to register your requirement or enquire about any other services offered by Burston Cook, then please contact us

address

Burston Cook

Lewins House
Narrow Lewins Mead
Bristol
BS1 2NN

0117 934 9977
commercial@burstoncook.co.uk

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