This market commentary is based on Burston Cook’s first-hand experience and knowledge in the commercial property sector, as well as Bristol’s leading commercial property agents and Bristol’s most active commercial agents in terms of number of transactions we handle on a year to year basis. We also have regard to national and international reports and trends.
The impact on the commercial property market in March 2020 at the beginning of the first lockdown was immediate and severe.
We at Burston Cook immediately put in place a strategy to allow all our team to work from home to ensure we could support our clients and manage our property instructions with as little business interruption as possible.
We returned to the office on a managed basis as soon as was safely possible and put in strict Covid policies to ensure it was “business as usual” as best as was practically possible.
We battled through the summer months, supporting clients, and working on new and existing transactions and by Autumn 2020 we were generated a better than expected level of enquiries across all sectors. This has continued and improved throughout 2021 in which time we have negotiated and secured many transactions and some notable disposals and acquisitions to the point where our agency team is now operating to capacity and we have most recently employed another experienced agency surveyor to work alongside directors, Finola Ingham and Tom Coyte.
Burston Cook’s Brief Overview of Bristol’s Commercial Sectors
It is becoming increasingly clear, and we are pleased to report that from extensive feedback we have had from Bristol’s business owners, office occupiers and employees, working from home for the majority will not become the norm. Employee feedback suggests that for many they do not have the long term homeworking facility and even if the space can be set aside at home, there has been an impact on morale, together with a feeling of isolation and a loss of human contact in a business environment has had a negative impact on motivation, team spirit, team collaboration, the inability to separate home-life from work-life, difficulties in mentoring/being mentored, poorer communication and generally missing team camaraderie and the efficiency to work as a team under one roof. This being said, we foresee that when the workforce return to an office environment, there will be a greater degree of flexibility albeit on a structured basis as opposed to “come and go as you feel”! We foresee that employees will return to the office 3/4 days per work and perhaps not necessarily to strict working hours of between 9.00 am and 5.30 pm…. We also envisage that with the current vaccination policy in the UK going to plan, employees will be returning to the office environment from late 2021 onwards.
In terms of office transactions, Burston Cook have negotiated several notable transactions throughout Bristol in recent months, including the acquisition and disposal of 5 office buildings in Queen Square, the acquisition of 2 office refurbishment projects at Lower Park Row and Portwall Lane and several office disposals elsewhere in central Bristol, Clifton and in the out of town business parks.
There is no escaping the widely publicised woes of UKs retail High Street, with the announcements of permanent store closures, with the likes of the Arcadia fashion brands moving to online only following the ASOS and Boohoo transfer and even the likes of Thorntons moving into an entirely digital presence. The list goes on and with more units in the High Street becoming empty landlords will be continuing to look at repurposing options and alternative uses. The introduction of the new Class E planning consent has offered a more flexible approach to marketing. HOWEVER, we at Burston Cook have noticed that many businesses were able to adapt to continue trading. In the local retail/leisure market in and around Bristol, there has been strong demand in secondary retail areas and in neighbourhood/suburban retail centres particularly for retail rentals of sub £30,000 per annum and leisure rentals of sub £45,000 per annum.
Since the beginning of lockdown, Burston Cook has been the most active retail agent in Bristol having secured many retail lettings throughout the City and its suburbs.
The industrial/logistics market have been leading the charge with significant deals being agreed across the region this year and such is the strength of this sector that demand continues to outstrip supply resulting in values steadily increasing. As a result, headline rents are now c £10 psf for new buildings sub 10,000 sq ft. Key transactions included Amazons acquisition of Logicor's 316,000 sq ft at WA316, Oxford Instruments pre letting of 108,000 sq ft and Wayfair 25,000 sq ft at Rockhaven.
Whilst the institutional investment market has remained relatively subdued, the local investment market has remained strong across all sectors up to £5m. Again, there is a shortage in the supply of decent stock and a queue of investors readily seeking suitable opportunities.
Funds are recognising the strengths of retail park investments where occupiers have generally faired well. Demand for industrial / logistics investments remain very strong and as office occupiers start to return to office working, we anticipate demand will improve for well positioned office investments where Bristol remains very popular.