Steady stream of deals during year but market yet to pick up
THE commercial office market in Bristol has continued to tick along but there is no real sign of a major upturn as yet.
There was a steady amount of deals last year in the city and the surrounding area but there is still no sign of any major projects going ahead as the economy continues to falter.
According to the report from Colliers International the financial and IT sectors kept the Bristol city centre commercial property market ticking over during 2012 – but the 22 per cent increase in activity was largely confined to the smaller end of the market.
There are still plenty of cleared sites in the city centre but no sign of the developers moving in to get developments under way.
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Offices specialist James Preece from Colliers International said the lack of deals in Bristol of more than 12,000 square feet meant the average transaction size was just 3,500 square feet.
Mr Preece said: "2012 was another challenging year for the Bristol office market with take-up at similar levels to 2011."
Take-up in the City Centre totalled 409,225 square feet for 2012 – a similar level to the last two years and within eight per cent of the five year average.
The largest letting in the last quarter of year was to Digital TV Labs who are taking a lease on 7,765 square feet at Castlemead.
Mr Preece said: "The prevalence of transactions under 5,000 square feet continued in the fourth quarter with around 90 per cent of the deals in this size range.
"The largest Grade A deal was Saffery Champness taking a lease of 6,805 square feet at St Catherine's Court, Clifton. Higher tier Grade B rents remain at circa £18-£20 per square feet with the majority of lower tier Grade B at or around £10 per square feet.
"Incentives remain the key negotiating point with many deals attracting two-three months per year of the term certain."
Out-of-town take-up totalled 251,373 square feet – 15 per cent down on the five year average.
Take up in the fourth quarter was at a similar level to the previous two quarters at 53,736 square feet, but approximately 25 per cent below the five year average for the final quarter.
Mr Preece said: "The out-of-town market was also dominated by small transactions of less than 3,500 square feet, the exceptions being the letting of the first floor Nicolson House to Harmoni HS, at £15.25 per square feet.
"There has been a marked lack of Grade A transactions out-of-town with no single transaction over 10,000 square feet."
Rent levels have remained static with Grade A at £19 to £22 per square feet and Grade B predominantly at £12- £15 per square feet.
Mr Preece concluded: "Last year may be seen as the watershed year for the Bristol office market with a significant upturn in transaction activity.
"The market was held back by the absence of any sizeable transactions in and out of town with only two occupational deals over 20,000 square feet.
"But we remain cautiously optimistic that 2013 should see an improvement in these figures with a number of larger deals due to sign in the first half of the year."