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Record investment into city centre
New research into the ‘Big 6’ regional office markets by property consultants JLL has shown that Bristol enjoyed record levels of inward investment in 2015.
Jeremy Richards, head of JLL’s Bristol office, said: “Strong economic conditions and the considerable investment being made into Bristol’s infrastructure has led to the city being put firmly on the radar for overseas money. Bristol experienced an exceptionally strong year, with £428 million traded – the highest volume we’ve ever recorded for the city – with the largest deal being the sale of One Glass Wharf to Mapletree Investments, Singapore based real estate developer, investor and capital manager, for £105 million.
“Alongside Manchester, Bristol is forecast to have the highest employment growth of all the ‘Big 6’ regional cities in 2016, so we expect investor demand to remain high over the next 12 months.”
As investors look for opportunities outside of London, £2.76 billion was spent the six large cities of Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester, up 17 per cent on the previous year.
Buoyant conditions look set to continue. Ollie Paine, director of capital markets, said: “Investor interest in the city and wider region looks set to continue. 2016 has started extremely well with £100m of acquisitions already completed together with the sale of Osborne Clark’s headquarters at Temple Quay.”
However there is concern that rising residential values could outstrip office values, encouraging more developers to turn office space into flats. JLL express concern that the permitted Development Rights (PDR) that allow these conversions are making it harder for businesses to find the right location. Commenting, Jeremy said: “PDR, which requires no planning consent, could tempt developers to take a less risky option to develop residential flats rather than offices which could see some of our strategic commercial buildings in Bristol come under threat.”
He also cautions that the big deals have yet to come in: “Bristol’s city centre office market had a disappointing end to 2015 which meant the annual take-up fell just below the five year annual average. The market was dominated by deals below 10,000 sq ft and, while it saw only 20 fewer deals than 2014, the volume of take-up was down 41 per cent year-on-year.
“This is partly down to a lack of new Grade A space in the city centre which continues to be a real pinch point with Bristol experiencing the lowest Grade A vacancy rate of 1.5 per cent, alongside Leeds, of all the ‘Big 6’.
“Unlike many of the other ‘Big 6’ cities, Bristol has not yet managed to attract a major landmark occupier in 2015 but the delivery of several high quality new build city centre schemes and significant infrastructure improvements could well change all of that in 2016.”
Image – Glass Wharf
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