Bristol has a ‘major shortage’ and is in ‘desperate need’ of new office buildings and the city ‘needs to act now’ to build more offices.
That’s the verdict from one of the world’s leading real estate management companies, which works closely with council chiefs.
Bosses at Jones Lang LaSalle said that it was ‘remarkable’ how quickly demand for office space had bounced back after the two years of the Covid pandemic, and there was a desperate need for ‘high quality’ office space in the city.
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A report from JLL said that even though there are around 14 million square feet of office space in the city centre, more than 95 per cent of it is already let out. New offices are being built, including the Halo building near Finzels Reach in Redcliffe and the EQ building near Temple Meads, but the city will have to build more new office space to meet demand.
Hannah Waterhouse, a director at JLL’s office agency team in Bristol, said things were looking positive for post-Covid Bristol.
“Keeping in mind that last year restrictions prevented people from going into the office, or people felt reluctant to return, it is quite remarkable that the Bristol office market - a barometer of the health of the city - performed so well,” she said. “This points towards a positive post-Covid resurgence.
"A move toward hybrid working certainly supported this combined with a drive by employers towards providing the very best, smart space with strong well-being and sustainability credentials to attract their staff back to the workplace and meet their carbon reduction and energy use ambitions.
"However, Bristol faces a real shortage of immediately available high quality office space; there is around 14 million sq ft of offices in the city centre but more than 95% of it is let. The development pipeline is active, but we need more. Currently, it looks like we'll have widening supply gap in 2022 so the city needs to act now to seize the moment and ensure it maintains its core city status,” she added.
Last year, despite the pandemic, JLL said that the ‘market in terms of office investment volumes’ was strong, with £261 million invested in office space in Bristol - almost a quarter higher than the average it has been over the past ten years.
The biggest deal in the final three months of 2021 was the University of Bristol taking up a lease on a huge office of 74,373 square feet at number 1 Trinity Quay, close to Temple Meads station.
JLL are key players in Bristol’s business world - bosses there are also closely linked with Bristol City Council, working with the council on projects like the redevelopment of the caravan site at Baltic Wharf on the harbourside, taking part in the Mayor’s One City partnership project, as well as representatives from JLL being appointed to the advisory board of the Western Harbour project.
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JLL’s report said that the headline ‘prime rents’ for offices in Bristol was £38.50 per square feet at the end of 2021, but that has already gone up by more than ten per cent - to £42.50 in the first two months of 2022.
Simon Bennett, a director in JLL’s capital markets team in Bristol, said JLL was predicting continued ‘strong occupier and investor appetite’ in the city’s office market during 2022.
“Investors remain attracted to Bristol as a strong regional centre with a tight office supply and excellent levels of demand,” he said. “We expect investment activity to remain strong amongst a wide range of investors, with demand for both prime office schemes and also repositioning opportunities where investors can refurbish and futureproof older buildings."
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The JLL report revealed that there is 566,800 sq ft of new build speculative space currently under construction in Bristol. Two part pre-let schemes - Halo at Finzels Reach and One Portwall Square - are due to bring 67,000 sq ft of speculative space to the market in 2022 but the remainder - EQ, Buildings B & C Assembly and The Welcome Building, totalling 500,000 sq ft - are not due to complete until 2023.
There were 11 transactions in excess of 50,000 sq ft across the six biggest regional UK cities - Leeds, Birmingham, Bristol, Edinburgh, Glasgow and Manchester - during 2021, including BBC Studios leasing 60,253 sq ft at Bridgewater House, Finzels Reach, Bristol.
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