Sector spotlight: Real estate

Since the harbourside was dusted off in the 90s, the cranes and JCBs have scarcely left the city. Bristol has been humming with redevelopment which, coupled with the city’s cool, have seen property prices creep ever northwards. Domestic properties are set, according to research by CBRE, to grow by 28 per cent over the next five years, matching London growth forecasts and outstripping any other UK region.

“The Bristol market in particular remains strong and is performing better than it did in 2015, with substantial house price inflation across the city,” says Guy Mansfield, Head of South West Residential Development at the CBRE’s Bristol office. “This has been fuelled in equal part by improved buyer confidence in the market and the city’s growing demand/supply imbalance. However, this is a double edged sword as the rising prices and consequent price inflation will exacerbate pre-existing price point issues faced by first time buyers upon trying to enter the market.”

Commercial property is following suit, albeit at a slower pace.

DEVELOPMENTS

Landmark developments including Number One, The General, Redcliff Quarter, Electricity House, The Chocolate Quarter and Wapping Wharf have seen millions of pounds of investment poured into the city.

Wapping Wharf has been steadily transforming the tract of land behind the M-Shed. The £40 million first phase, launched in spring, brought 194 apartments and retail spaces online, as well as the popular Cargo development designed to make city centre space affordable for new, independent businesses; phase two will include over 320 homes and further retail space. 

“It is one of the city’s most significant development schemes and is one of the final pieces in the jigsaw that will complete the regeneration of Bristol’s floating harbour,” says Stuart Hatton, director of one of the developers, Umberslade who has been staunchly committed to recruiting independent companies for the retail units.

The £180 million Redcliff Quarter development will transform a run-down series of warehouses into a new neighbourhood with 300 homes, European food hall, market and restaurants. “If you’re familiar with the derelict site as it stands at the moment, and the under-investment this area has seen over many years, you can envisage the change for good that the development will bring throughout the community,” says Ron Persaud, director of Change Real Estate which is behind the regeneration. “We estimate that Redcliff Quarter will contribute 400 – 500 jobs and an estimated £7million into the local economy each year once completed.”

The company is currently developing sites at Redcliffe Parade West and the Ashton Gate brewery.

The landmark former-Chocolate Factory in Keynsham is set to spring back into life in 2017 when a major, £60 million refurbishment will come online. The old Cadbury’s site, bought by the St Monica Trust last year, is being turned into a multi-use retirement community and employment space that will include 140 assisted living apartments, a 90-bed care home, retail outlets, leisure facilities and 100,000 sq ft of office space. It’s part of the wider Somerdale development on which Taylor Wimpey is building 700 new homes, a primary school, nursery, shops, sports pitches and conference centre.

The design has retained or replicated as much of the building’s industrial heritage as possible, which will provide the same type of character space as the successful Paintworks scheme in Bristol but on a much larger scale, says Alder King partner Simon Price who is charged with leasing the space, making it “one of the most distinctive commercial locations outside Bristol and Bath.”

City & Country are the major developers behind the transformation of the former General Hospital into 209 homes, the first phase of which opened in 2014 and has revitalised the Bathurst Basin. The company continues to invest in the city with planning permission granted in June for the restoration of Regent House and Consort House on Bedminster Parade – Factory No.1 – to create 247 new homes.

Smaller scale developments are underway across the city, from Southville’s Bankside to Alison Court, a micro development of 15 apartments, bought by Bristol developer Urban Creation earlier this year who are turning the 1970s building into high-quality flats and studios.

Urban Creation spends an average of £3million each year on Bristol construction projects – often in historic buildings – which have so far returned 1,100 flats to the market. Its Prince William and Matthew House project is one of its largest student accommodation projects, a £4.5million city centre renovation that will create 75 student bedrooms

Jonathan Brecknell the company’s director, says: “Bristol is scattered with hidden property gems which are often overlooked, though they offer huge potential.

“If plans go ahead for a new combined authority for the region, bringing with it devolved powers from central government, there will be new opportunities open to this part of the country,” he says, “particularly in areas such as transport and housing where joined-up thinking is essential.”

“A clear gap that we know the Mayor is trying to address is the lack of affordable housing, which is extremely difficult to tackle given the pent up demand and lack of supply,” says JLL Bristol’s lead director, Jeremy Richards, whose company has been in Bristol for 250 years; “but we are hopeful that Bristol City Council will be successful in promoting more of this type of accommodation.”

COMMERCIAL

Office spaces have been subject to the city’s biggest changes. With newly flexible working styles and free planning permission to convert offices into much-needed housing stock, many commercial spaces have been turned into flats. But that’s set to change.

“The return in demand and value in the office market has had far-reaching implications,” Jonathan continues. Now that office values are so high, it makes the conversion of offices to residential space under permitted development rights often unviable financially, so we are actually seeing the reverse taking place.”

Philip Morton, head of office agency and development at CBRE Bristol – a regional hub for the international commercial property firm that employs 47 staff – also identifies a lack of grade A office property. “There is just 80,000 sq ft of existing new office space in the market out of a total vacancy rate of 800,000 sq ft within a city centre stock of 14 million sq ft,” he notes.

Regional senior director at commercial property adviser Bilfinger GVA, Jo Davis says the provision of decent office space is crucial to the city’s ongoing success: “Bristol has created a sustainable and robust economy over recent years which has resulted in it being the only UK core city outside of London that makes a positive contribution to the UK economy.

“In order to maintain this momentum we need to make sure that we offer business the environment in which to thrive. And that means building the right space in the right place.”

Jeremy echoes the “severe lack” of office accommodation. However he praises the new arena development and transformative potential it shows. “I think the Bristol City Council’s aspiration to build the Arena and its positive acquisition of the old Parcelforce site could be the single biggest change to the city centre in the coming years and will have a great impact in terms of the entrance to the city when you arrive at Temple Meads.”

“The biggest local news from the commercial property sector in the last 12 months has arguably been progress on a new junction for the M49,” says Tim Davies, head of the Bristol office of commercial property specialist Colliers International, emphasising the strength of the city’s logistics sector.

“It is impossible to underestimate the strategic significance of this additional junction, which will provide a vital road connection into Avonmouth Severnside Enterprise Area, and will support economic growth and employment in these areas by opening up thousands of acres of brownfield land to developers. National developer Mountpark have recognised the Severnside opportunity and is developing a 400,000 sq ft speculative warehouse scheme, one of the largest speculative schemes to have been developed in The South West for many years.” 

BUILDING

At a national level, the construction industry is facing down a recession, however Bristol is bucking the trend. “We appear to be on a far different trajectory to the wider industry as we are busier than we have ever been,” says Gary Sheppard, chief executive of Helm Construction. “It’s plain to see construction levels in Bristol and Bath are continuing to accelerate, with plenty of activity in the city centres and also in the suburbs. We are working on everything from large garden plots to old parking areas and brownfield sites in the city centre as owners authorise schemes which may have lain dormant for years.”

However he warns that post-Brexit currency fluctuations are likely to impact the cost of building new homes and extensions from early next year. “We are being advised of increases on some products of more than 18 percent”, which could put “an extra 4-5 per cent on an average projects” from January.

Main image – CGI rendering of the new Redcliff Quarter 

Read more: Harbourside jigsaw to be completed