The Bristol office market has enjoyed a couple of exceptional years in terms of take-up, with last year’s level being close to the record heights seen in 2007 and 2014 at 782,938 sq ft (72,737 sq m). Grade A take-up in the city centre accounted for 42 per cent of 2016 transactions – the highest levels seen since 2007. This high demand has left the city with a lack of both Grade A and Grade B stock, so what does this mean for the Bristol office market?

There is currently only one speculative development in the city, which is Aurora at Finzels Reach. The lack of new stock coming to the market has meant those looking for space over 20,000 sq ft (1,858 sq m) are now needing to consider pre-lets. Assembly Bristol, a new development close to Bristol Temple Meads station, is offering pre-lets on offices up to 300,000 sq ft (18,580 sq m) with typical floors spanning 23,000 sq ft (2,136 sq m). The focus of Assembly Bristol will be the public realm, providing waterside spaces, rooftop gardens and indoor and outdoor amenities; this provides a new type of destination for occupiers, a site that will appeal to the increasing number of TMT occupiers taking space in the city.

We expect to see work on more speculative developments commencing as a result of the likely increase in pre-let activity. What will prove most interesting will be the floor plate sizing the developers choose.  Divisible floors of 10,000-15,000 sq ft (929-1,394 sq m) are currently the sweet spot for occupiers. There is a lack of larger floor plates over 20,000 sq ft (18,580 sq m) as developments including Templeback and Bridgewater House, which did offer this, are now under offer/fully let.

In Bristol refurbishments have previously taken the lead in providing occupiers with Grade A level space in the city centre. There have been a number of high-profile refurbishments including Programme, One Brunswick Square and St Augustines that are tailored to the needs of TMT and tech companies. As the city continues to attract a diverse range of occupiers the lack of Grade A stock has been further highlighted. The rental differential between comprehensive refurbishments and new developments stands at as little as 50p per sq ft (£5 per sq m) as a result of this squeeze on stock.

Demand doesn’t show any signs of slowing as Bristol continues to attract a host of different occupiers. As developers continue to adapt, be it through increased speculative development or refurbishments, we expect to see appetite for space in the city to continue as we reach the next wave of lease events.

Further information

Read more: Spotlight: Regional Office Market Review & Outlook