• Swindon & Wiltshire Property
• Thursday March 14 2024
• Author Name: Peter Davison

Weaker demand for Bristol’s grade B office space leads to lowest take-up in a decade – Carter Jonas

Weaker demand for older office space in Bristol city centre has led to the lowest overall take-up in a decade, while enthusiasm for Georgian houses as offices in Bath is waning, according to commercial property consultancy Carter Jonas.

The firm’s Commercial Edge report for Q4 2023 says the market is polarised between the best new grade A product, which is still experiencing growth in headline rents and steady demand but is in short supply, and the grade B band, which is “markedly more difficult.”

As a result, says the report, overall take up in the city centre has dropped to its lowest level in more than a decade, totalling 419,000 sq ft – 30 per cent below the ten-year average.

Meanwhile, competition for the very best assets pushed the prime headline rent to £44.00 per sq ft, and Carter Jonas expects this level to move upwards to £46.00 per sq ft and beyond during 2024.

“Landlords of grade B properties are confronted with challenging decisions: they can opt to refurbish and upgrade their properties to achieve zero carbon credentials, or they can pursue alternative strategies,” say the report’s authors.

“These alternatives include leasing to serviced office operators or converting the properties into student housing or residential units.

“Going forward, we expect a greater proportion of the supply pipeline to be refurbished rather than newly built, given that the city centre has around 1 million sq ft of available grade B office space.”

Key office transactions in the fourth quarter of 2023 included Dyson, which took 66,000 sq ft at 1 George’s Square in the city centre (pictured) to create a £100 million R&D hub, and DLUP, which took 28,550 sq ft at Neighbourhood North.

The biggest out of town deal was at Lakeview, where Hewlett Packard took 26,000 sq ft.

Enthusiasm for Georgian houses as offices is waning

In Bath, meanwhile, businesses are eschewing Georgian buildings in favour of open plan offices.

“For many decades, many Bath office occupiers rented beautiful Georgian buildings – typically over five floors and without lifts in these listed buildings,” say the reports authors.

“Those days are long gone, and as leases expire, almost all occupiers move to open-plan space, of which Bath has a relatively limited supply.

“Much of the older stock is being converted back to its originally intended use as residential.”

Take-up in the Bath market totalled 58,951 sq ft in 2023 – 20 per cent below the five-year average and the lowest year for office leasing since 2010, says the report.

“When deals across the wider Bath & North East Somerset region are stripped out, there was only just over 40,000 sq ft of space let in central Bath – and many of the lettings were very small.

Availability within Bath hovered around 340,000 sq ft for most of the year, which is 13 per cent of the total stock.

This compares poorly, say the report’s authors, compared with historical figures across the city – previously circa 120,000 sq ft.

“The serviced office market continues to shine within the city, and with current lettings agreed, this area appears to be moving well and will likely result in better take-up figures for 2024,” says the report.

“For a city dominated by small businesses, it is only surprising that it took a pandemic for this area to take off.”