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News Release

Cardiff

More speculative development needed to boost Wales economy


Cardiff, 4 March 2014 – Wales needs more speculative development if it is to overcome a significant shortage of high quality office and industrial space, according to leading property advisors JLL.
This research was presented at the 2014 South Wales report launch breakfast event, which bought together over 150 real estate decision makers in the now customary setting of the SWALEC Cricket Stadium at Sophia Gardens, Cardiff.
Cardiff speakers
The report, entitled OnPoint, suggests that despite improving confidence in the Welsh economy, there are still significant gaps in the supply of new and modern stock in both markets.
 
In the office sector, there is a clear rise in the number of first class employers looking to create a new productive and collaborative workplace, demonstrated by the emerging Admiral buildings in Cardiff and Newport who will take 300,000 sq ft of city centre office space and house almost 3,500 staff between them. This, combined with the proposed relocation of BBC Wales in 2014, underlines the strength in occupier demand in the office sector.
 
Chris Sutton, lead director at JLL’s Cardiff office, says: “The provision of new workspace is vital if we are to attract and retain higher value industries in our region. The increase in market activity should give developers and investors the confidence they need to create the speculative development which Wales sorely needs.
“However, there are some encouraging signs of a return to speculative development in the Cardiff market by developers who have the opportunity to tap into the targeted Enterprise Zone marketing programme which is being aimed at the financial and professional services sector.”
The current undersupply of Grade A space in Cardiff has led to relatively robust headline rentals and, coupled with Cardiff’s capital city status and compact centre, the city is proving to be an attractive investment proposition compared with other parts of the country.
In the industrial sector, JLL predicts that new development is, in the first instance, likely to be focused upon ‘demand-led’ bespoke projects that incorporate key features not found in second-hand stock. These include cross-dock distribution warehouses and space for the waste-to-energy sector, of which Viridor’s new waste-to-energy plant in Ocean Park is a prime example.

Chris Sutton continues: “Increased confidence in the economy contributed to an 83 per cent rise in industrial take-up in South Wales between 2012-13, which has meant the total availability of floorspace has reached pre-recession levels.
“Demand has been driven by the encouraging trend to bring manufacturing jobs back to the UK, overflow demand from the Midlands and South West together with the changing nature of distribution.”
Based on the emerging office and industrial demand, JLL predicts that the Welsh Government will prioritise the procurement of new floorspace and gap funding will be made available to ensure speculative projects get off the ground.
The retail market has also shown signs of sustained improvement during 2013 with more than 90 per cent of retailers reporting like for like annual growth.
 
In Cardiff, the traditional arcades in the city have their unique, boutique offer but Queen Street and the other centres outside St David’s have experienced mixed fortunes, with many retailers having a clear preference to be represented in St David’s.
 
Chris added: “Looking ahead, the city can remain proud of new entrants and the continued interest from international retailers. It is well placed to capitalise on consumer demand for a complete retail experience.”
JLL also believes that Cardiff is well positioned to capitalise on the rise in confidence in the investment market.
Chris said: “Investors are looking for good returns and London is such a competitive market that they are now turning to the UK’s thriving regional cities, of which Cardiff is one.