South West office market set for recovery

Bristol’s diverse economy and Temple Quarter Enterprise Zone to fuel recovery in the South West office market

Article posted: 03 Nov 2011

According to a recent report from BNP Paribas Real Estate, 2011 take up of office space in Bristol is unlikely to reach that of 2010 levels with rents remaining static, but investment has soared.

The leading international real estate adviser’s Bristol Office Market Autumn Report showed a flat occupier market below 2010 levels, whilst the investment market surpassed 2010 levels considerably.

The occupier market slowed due to fewer large requirements in 2011. Total take up in the city centre to the end of Q3 was 311,100 sq ft, 13% lower than the same period in 2010 whilst the out of town market saw take up of 233,500 sq ft, 23% lower than last year.

The report showed that availability levels remained the same at 2.2m sq ft in the city centre and 1.2m sq ft out of town. However, grade A stock in the city centre had been under pressure until HDG Mansur’s 110,000 sq ft Bridgewater House scheme was completed. However, with the completion of HDG Mansur’s Bridgewater House (pictured), one of the largest speculative schemes undertaken outside central London, at 110,000 sq ft, the tenant market in Bristol now has the accommodation for those requirements seeking Grade A space.

Peter White, office agency director at BNP Paribas Real Estate’s Bristol office, commented: “While the occupational market has been more difficult in 2011 than last year, we are confident that Bristol’s economic diversity will underpin the office sector during 2012.”

Bristol city centre headline rent remains at £27.50 per sq ft since Q1 2010 while out-of-town rents have fallen to £19.50 per sq ft in Q3 2011, compared to £21 per sq ft a year earlier.

By contrast, the Bristol investment market is soaring, with £243m spent in 2011 by the end of Q3, up from just £106m invested over the whole of 2010. Since Q1 2011, prime Bristol yields have moved in 0.25 basis points to 6.25%, with the exception of the 5.5% yields achieved in the sale of Horizon House to a private investor in September.

Paul Matthews, head of BNP Paribas Real Estate’s Bristol office, commented: “Investor appetite remains firmly focused on well-located prime offices with secure long-term income streams, and competition for these types of assets remains tough.”

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Posted by Julie