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Why the cost of office space is set to rise in Bristol in 2018

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Written by: Hannah Baker | Posted 08 January 2018 7:47

Why the cost of office space is set to rise in Bristol in 2018

The lack of supply that resulted in a 14 per cent increase in Bristol office rents in 2017 is set to drive them to an even higher level in 2018.

James Preece, national offices director at commercial real estate company Colliers International, predicts prime rents in the city centre will continue to rise beyond the £32.50 per sq ft recently achieved for One Cathedral Square on College Green.

He said: “With supply now at an historically low level it seems inevitable the upward trajectory will continue and even higher figures will be achieved in 2018.

“This is particularly the case for Grade-A rents, which have been driven upwards by lack of speculative development.

“I would not be surprised to see top rents in the city centre head closer to £34 or even £35 per sq ft as more deals are done at Aurora, the 95,000 sq ft scheme at Finzels Reach, which is the only speculative office development in Bristol.

“Pre-lettings at Aurora are being agreed at such a pace that although it will bring more supply to the market when it completes in mid-2018, it will do little to address the problem of lack of space in Bristol.”

Read more: The business trends to watch in 2018

Mr Preece believes lack of new-build office space in Bristol is fuelling demand for refurbished options.

He added: “Tower Wharf is a very good example of the demand for quality refurbished space, with two floors at close to 20,000 sq ft under offer at the moment.”

2018 is likely to be another strong year for office investment in Bristol, he adds, with the attraction of the city to investors underlined by the recent £33.5 million sale of One Cathedral Square.

“Confidence in Bristol will undoubtedly have been boosted by the fact that both city and out-of-town witnessed take-up levels well above the five-year average in 2017.

“The year also saw the most dramatic increase in city centre rents since 2014-16, when Grade-B office space went up by circa 30 per cent as a result of Permitted Development Rights removing a substantial proportion of secondary office stock from the city centre market.”

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