Savills comment: Bristol office top rents stay steady due to lack of supply23rd May 2012

According to Savills latest Bristol office market report, grade A supply stands at only 300,000 sq ft (27,870 sq m), just 11% of the 2.7 million sq ft (250, 830sq m) currently on the market, and the firm reports that this low level of supply is ensuring that top headline rents continue to hold at £27.50 per sq ft (£296 per sq m).

Paul Williams, director at Savills Bristol, said: “Even with the recent completion of HDG Mansur’s 110,000 sq ft Bridgewater House, the lack of development pipeline means that grade A supply still remains low as a percentage of total stock. We expect this to put pressure on prime rents in the medium term as the continued lack of speculative office development will cause grade A supply to continue to decrease.”

According to the bulletin, take-up of Bristol office space in 2011 was dominated by the professional sector and, as expected, this trend has continued through Q1, with a 17% share of total occupancy attributed to this sector, notably legal firms.

However, Savills says that despite the strong take-up for the professional sector, overall take-up in Q1 stands at 195,711 sq ft (18,182 sq m) which is 15% down, quarter on quarter. Encouragingly though, there has been an increase in occupier requirements, with Savills estimating the volume of current city centre searches to be at 150,000 sq ft (13,935 sq m).

The high number of short term leases and lease breaks granted by landlords over the past three to five years has resulted in an above average quantity of expiry events occurring and anticipated in 2012, with Savills expecting this figure to be around 400,000 sq ft (37,160 sq m) for the year.
The report states that the investment market started slow in 2012, unlike the same quarter last year, which was very active. Total investment activity in 2011 reached £269 million, more than twice that of 2010, yet just £11m has been transacted so far this year.