Bristol has seen numerous new build office developments and retrofitting projects complete in the past six months, and several expected completions set for later this year.
Taking this at face value, one could assume an oversupply, but on review it is evident that Bristol is going to have an acute shortage of prime office stock serving occupiers that require large floor plates from 2025 to 2028. This, therefore, presents an exciting opportunity for landlords with stock coming back to reposition their asset. Or, for occupiers with upcoming lease expiries, pressure to review their property strategy and start discussions early.
New build availability currently stands at 192,626 sq ft. This year, we expect a further 524,654 sq ft to complete, of which 31% is currently pre-let, meaning there is a further 359,854 sq ft of upcoming stock available.
BNP Paribas Real Estate analysis suggests that, beyond 2024, there will be an acute shortage of larger floor plates over the next four years.
As illustrated in Figure 1, which analyses all the new build developments that have either still completed, or about to complete in 2024, there are several schemes serving requirements below 10,000 sq ft. However, there is limited supply of new build stock within the city centre that will appeal to requirements above 15,000 sq ft, if those occupiers are seeking a single floor.
Below is a graph with all the new build offices that either have completed and have vacancy, or are due to complete this year. No other developments are yet to put a spade in the ground, which will leave a 2-3 year window of no new build delivery.
Figure 1. Bristol City Centre – New Build Floor Plate Analysis
Note: Data including retrofitting of 100 Victoria Street (Bristol One Hundred) and The Crescent Centre given they were stripped back to frame.
Source: BNP Paribas Real Estate
Out of the above new builds, few can satisfy large office requirements that are seeking open plan floor plates above 15,000 sq. ft. This will further enhance this shortage in coming years and likely lead to further rental growth.
Following a recent deal to DAC Beachcroft at Welcome Building the prime rent in Bristol now sits at £45.50 per sq. ft**, a 5.88% increase on the previous Bristol prime rent. We expect a further nominal increase over the course of the year before it plateaus whilst demand catches up with supply. However, after 2025, we expect this pinch in supply to tighten and further rental growth to occur to 2028.
Figure 2. Bristol Office Prime Rent Forecast
Source: BNP Paribas Real Estate
** Latest data available as at 23rd Feb 2024
Companies with upcoming lease events and plans to relocate to new build Grade A stock, therefore need to act quickly to ensure they secure one of the few upcoming options. This has already been evidenced, with tenants such as OVO Energy with its lease expiry in April 2026 and Burges Salmon, with its expiry at One Glass Wharf in 2030 already actively seeking space.
This provides an exciting opportunity for the landlords of the below buildings (and others with vacancy) to reposition their asset and capture some of the demand for high quality office space during this time.
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