Bristol’s economy is strong, and getting stronger: it expanded by 19.2 per cent between 2009 and 2014, outpacing both Birmingham (up 16.3 per cent) and Manchester (up 15.2 per cent), and is forecast to continue to grow for the foreseeable future.

Relatively low property and staffing costs compared with the south east, combined with Bristol’s reputation as a hub of creativity, energy and innovation, have attracted a range of new businesses to the city. It has proved to be particularly popular with those in professional, scientific and tech sector, which has grown by 44 per cent over the last five years, and the information and communication sector, which grew by 26 per cent over the same period. Employment growth means that an estimated 14,000 office based jobs will be created during the next decade.

Demand for office space to house these new and growing businesses is already high.The forecast for the amount of space required in 2016 alone is 800,000 sq ft – up 63 per cent on last year. At this rate, there is only a year’s worth of Grade A space left, with limited development set to come forward to meet demand.

Indeed, Aurora (95,000 sq ft) at Finzels Reach is the only speculative office development currently on site, with planned delivery in September 2017. There are a number of further developments pending, including Aspire (200,000 sq ft), 3 Glass Wharf (109,000sq ft) and Glass Fields (100,000 sq ft), but these are yet to be confirmed.

The lack of options available to occupiers has already increased demand for ‘value add’ office projects (refurbished space in older buildings ) to plug the gap. As a result, new build and refurbished rents have almost converged: new build office rents currently stand at £28.50 per sq ft (£307 per sq m) compared with £27 per sq ft (£291 per sq m) for refurbished office space.

With Grade B market rents also hitting £25 per sq ft (£269 per sq m), we predict that continued demand could see Grade A rents hit £30 per sq ft before the year is out and could reach £35 per sq ft (£377 per sq m) by 2020. As a result, office values have overtaken residential in some locations: prime office capital values in the City Centre have now reached £500 per sq ft when built – climbing 28 per cent from circa £360 per sq ft in 2014 – and overtaking the £425 per sq ft for residential space.

If one of these buildings secures a significant pre-let, it would likely help launch other much needed development in the city centre over the next few years. Ensuring a strong pipeline of future office space is fundamental to Bristol’s continued competitiveness and growth beyond the immediate future.

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