Decline in demand for commercial property in Bristol – Carter Jonas
The Bristol city centre office market has witnessed a decline in demand in the first half of 2023 compared to the same period in 2022, according to a new report from property consultancy Carter Jonas.
In what the Commercial Edge Q2 2023 describes as a ‘polarised market’ the best Grade A stock is attracting rental levels of £42.50 per sq ft in the city centre, or £28.50 out of town.
However, grade B and below, or any stock with an EPC band below C is proving more of a challenge.
Demand has also been subdued outside the city centre. But, notes the report, “this masks a more positive story, however, with lots of activity from within the aerospace and defence sector that should give rise to an improved take-up data in the second half of the year.”
“Zero Carbon in construction and operation is becoming a strong draw for occupiers keen to adhere to sustainability standards,” partner Andrew Hardwick writes.
“This is likely to give rise to rather more refurbishments coming forward both in the city and out of town, where the structural frame can be retained.”
The report notes that a number of major developments in the city centre are approaching completion over the next six months.
The industrial sector, meanwhile, has had “a tough first half of the year”.
“Bristol’s industrial take-up in H1 2023 totalled 902,000 sq ft, a drop of 37 per cent for the same period in 2022,” says the report
“This decline has been caused mainly by a lack of mid and big-box deals, with only one deal over 100,000 sq ft in H1 2023.
“However, there is a continual lack of supply of units below 50,000 sq ft, where the majority of demand sits currently.
“Prime rents stand at around £9.00 per sq ft for units of circa 10,000 sq ft and £8.50 for units of circa 20,000 sq ft and above.”
In Bath, where prime office rent is around £36 per square foot, partner Philip Marshall reports “a slight uptick in activity in recent months, but it is too early to say whether this is a sign of a sustained recovery,” with viewings increasing and offers slowly following.
“We predict the market will continue along these lines into the autumn, and year-end figures will be largely around normal levels for the city,” says the report.
And the report comes with a plea to Bath & North East Somerset Council to permit more flexibility for listed buildings to be used as residential accommodation to allow the local market to absorb the newer, better-quality space.
“With just three per cent unemployment, it is hard to see businesses growing materially to help this change take place through expansions and relocations,” says the report.
Pictured: HSBC’s move to 11,054 sq ft of the EQ building was the biggest city centre lease transaction of Q2 2023, according to the report.
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