Bristol City Centre office take-up below average for Q3 2021 but experts predict a strong Q4
JLL anticipates a strong end to the year with the prospect of a jump in headline rental figures
According to the latest research from JLL, the Bristol office market has seen 291,000 sq ft of office space transacted to date in 2021. This represents a drop from take-up recorded for the same period in 2020 by 15%. However, research found that the number of transactions for Q3 remain in line with the average, indicating that occupiers are continuing to acquire new space, albeit some with smaller requirements continuing the hybrid work model trend.
JLL cited that the below average take-up this quarter belies the underlying strength of the Bristol office market which could see record take up in Q4 2021, potentially totalling over 200,000 sq ft which would be in excess of the average amount of space transacted in the final quarter. Furthermore, there is the prospect of increased rents on the horizon.
JLL attributed the prediction for high take-up levels and increased rents in the final quarter of the year to the pent-up demand caused by the pandemic in addition to the low vacancy rate which is currently below 6% in Bristol City Centre, representing one of the lowest levels in the UK’s largest regional office markets. This coincides with a shortage of high quality, sustainable space with only 26,000 sq ft of new space due to complete over the next 6 months and only 100,000 sq ft of new Grade A space currently available. These factors are creating competition for the best space.
The Bristol office market has also seen a shift in requirements, according to JLL, with more businesses now valuing flexibility and quality over headline rental levels, with many occupiers ready to make the full transition back into the office. Professional services have typically been downsizing with a hybrid work model which has allowed them to take a higher quality of office at the same overall cost. In contrast, there has been a sharp increase in demand in the technology sector, where trends are pointing towards them taking higher volumes of higher quality space.
Hannah Waterhouse, Office Agency Director, Bristol said, “We estimate that there are over 15 significant deals under offer in the city centre and predict over 200,000 sq ft of take up in Q4. There are some excellent quality schemes under construction and with an occupier focus on taking the best space to bring their employees back together along with sustainability factors becoming higher up on the agenda, we predict that headline rents will break the £40 sq ft barrier over the next 6 months in Bristol City Centre.”
She adds “Many occupiers believe that there must be an abundance of space given the shift in work culture with many businesses taking a flexible approach to working from home. However, that has not been the case in Bristol City Centre and there are still high levels of competition for the best buildings. We are seeing a great deal of change in terms of how occupiers use their space and what they now look for and this is being reflected in the take up.
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion in 2020, operations in over 80 countries and a global workforce of more than 92,000 as of June 30, 2021. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit jll.com.