2015 was a fantastic year for the office market in Cardiff, with total take-up reaching 616,000 sq ft – a record for the city. The most significant deal was the pre-letting of the 150,000 sq ft office building at Central Square to the BBC for its new Welsh headquarters. Not only was this a large deal, but it was also a catalyst for other lettings in the development. But what does 2016 have in store?

With rental growth over the past seven years only increasing by approximately five per cent, we expect rents to increase by 15 per cent on 2015 levels this year, reaching £25 per sq ft for the first time ever. The anticipated increase will be down to competition for the newly completed Grade A offices in the city centre, something we have been woefully short of for some time. This rise is long overdue as Cardiff still lags behind most major cities in the UK, with Bristol now at £28.50 per sq ft and expected to top £30 per sq ft in 2016.

The really interesting story in 2016 will be that all new Grade A space in Cardiff could be fully let by early 2016, and therefore we may have no available new office space for around 18-24 months once One Central Square and 2 Capital Quarter are completed.

There are, however, a number of major office refurbishments taking place, and these are well placed to pick up enquiries from companies seeking to occupy high quality offices in the city during 2016. We could potentially see rents as high as £22 per sq ft achieved in these buildings.

Refurbished office space expected to come to market in 2016 includes 50,934 sq ft at St Patricks House, close to Cardiff Central Station, 35,000 sq ft at 2 Kingsway and 16,953 sq ft at Haywood House North on Dumfries Place, within Cardiff’s professional office quarter.

Will we see the levels of take-up by occupiers in 2015 matched in 2016? Only if some significant pre-lets are agreed, which isn’t out of the question. As Cardiff continues to grow and develop it will be interesting to see what develops over the next 12 months, and if the city can attract any new companies, which is key to sustaining growth.  

Further information

Contact Savills Office & Business Space or Savills Cardiff