‘Resilient’ Bristol office market can overcome coronavirus-linked market slowdown, says report

May 1, 2020

Bristol’s office market is well-placed to cope with the impact of the coronavirus pandemic after enjoying the strongest quarterly take-up figures for 10 years, according to a new report.

In a market dominated by the professional and financial services sectors – which accounted for the top five deals in the city centre – take-up between January and the end of March was 52% above the quarterly average. 

As a result, the market is well placed to “weather the current storm”, the latest Big Nine report from global property firm Avison Young suggests.

The report, a quarterly review of the UK regional office markets, shows total take-up in Bristol city centre reached 219,420 sq ft.

Avison Young Bristol director Paul Williams, pictured below, said: “The take-up figures reflect the healthy situation of the Bristol office market before the Covid-19 crisis. 

“Bristol saw one of the largest deals within the UK Big Nine markets with Osborne Clarke taking a 74,000 sq ft pre-let at Halo, Finzels Reach [pictured].”

The largest standing stock transaction was at One Temple Quay, where Sanlam Life & Pensions took 20,365 sq ft in a deal where Avison Young represented the landlord.

There were four further deals above 10,000 sq ft, including lettings to engineering company WSP and law firm Ashfords.

The report also said that activity in the first quarter had moved city centre headline rents to £35.50 per sq ft, and asking rents to £37.50 per sq ft.

Paul Williams added: “The strong fundamentals in the market will likely provide an element of resilience during the current pandemic, meaning it is well placed to recover when the lockdown is lifted, assuming a return to some form of normality over the next few weeks. 

“Vacancy rates are low and 65% of the current stock under construction is pre-let.Occupiers are still trying to progress requirements that are well established, and there are some sizeable requirements in the market.”

The three speculative buildings under construction or about to start in the city total 237,000 sq ft. As well as Halo, these are the Distillery at Glassfields on Temple Way, where 93,000 sq ft is available, and 1 Portwall Square, where developer Nord has cleared the site and is expected to start construction shortly.

However, Paul Williams said activity was expected to be significantly down over the next months.

“The lockdown is not only creating uncertainty around pricing and occupational requirements but significant practical difficulties,” he said.

“Viewings and due diligence cannot be carried out and material for construction sites and fit-outs will be delayed.

“However, several deals are progressing regardless, while others are taking a ‘wait-and-see’ approach. We remain positive about prospects for the Bristol office market to recover quickly once the scientific advice allows for the present restrictions to be eased.”

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