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Developers’ caution means Bristol increasingly reliant on second hand stock

Grade A office space being “eroded” according to Jones Lang LaSalle

Bristol, 23rd August 2011 - Bristol’s office market is increasingly reliant on second-hand space because of developers’ caution at starting any new projects.

That’s according to international property consultants Jones Lang LaSalle in its latest UK Office Market Conditions report.
The report states that the volume of Grade A supply in Bristol city centre “continues to be eroded” but that situation is offset by “a steady stream of second-hand space”.

Commenting on the report Ian Wills, Director in the Office Agency at Jones Lang LaSalle, formerly King Sturge in Bristol, said: “New Grade A supply will come to the market during the second half of the year when HDG Mansur’s 110,524 sq ft Bridgewater House completes, along with 2 College Square, Harbourside, which includes 26,200 sq ft of speculative space.”

However Mr Wills said that Bristol was unlikely to see any new speculative starts in the next 12 months as developers exercise caution.

“This has been further fuelled by AXA’s decision to shelve its 80,000 sq ft Bristol requirement,” he added.

Jones Lang LaSalle's report shows that overall take-up in Bristol for the first half of 2011 was 391,000 sq ft, with the city centre accounting for 62 per cent of that. Take-up in the city centre fell by 49 per cent compared with the previous quarter when the 26,300 sq ft deal to SMS Cameron McKenna at 2 College Square, Harbourside, boosted activity.

Prime rents in Bristol remain stable at £27.50 per sq ft and the report describes incentives as remaining “generous” in the city centre, with up to 18 months rent free on a five year term and up to 36 months on 10 years.
“With Grade A supply continuing to fall we expect incentives to move in over the next 12 months,” said Mr Wills.

Finally the report turns to the investment market which remains popular in Bristol even though transactions are relatively scarce due to a shortage of appropriate properties. Key transactions to complete during the first half of 2011 include the sale of 2 Temple Back East to DEKA for £30.1 million and the sale of One Glass Wharf to Aerium for £82.4 million.