Cardiff doesn’t currently have enough available Grade A office supply to meet the demand for even one year’s worth of take-up. Therefore, refurbishment opportunities are attractive given their speed in reaching the market and their ability to 'plug the gap' while occupiers wait for developments to complete.  

There is also a lack of good quality Grade B buildings available in the city, and landlords who opt to undertake a moderate refurbishment of the common parts could achieve rents between £18-£20 per sq ft, capitalising on the shortage of good quality Grade B space. We anticipate demand for this space will increase notably from cost-sensitive occupiers who could face their rent bill doubling if they moved into Grade A space.

Refurbished space in Cardiff is being snapped up and has resulted in impressive rental growth of over 30 per cent. Unlike some other regions the gap between refurbishments and new builds still has a way to go. With top rents currently standing at £25 per sq ft there is room for refurbishment rents to increase further, if the location and floorplate is right. St Patrick’s House, Penarth Road, is one of the first refurbishments to push rents past £20 per sq ft, with a 39 per cent increase from £16.50 per sq ft to £23 per sq ft.

With occupiers concerned about attracting and retaining staff, more are offering showers, cafes and improved reception areas. In turn these workplaces are attracting an improved tenant mix. There is ample opportunity for investors to purchase ‘value-add’ buildings where even a light refurbishment would see increased rental growth. As landlords comprehensively refurbish secondary space to entice and retain tenants, this acts to maximise rental income, attract higher tenant covenants, and enhance capital value and longevity of the asset. 

One particularly active business sector within the refurbishment market has been the tech sector. This has fuelled the rise of the ‘defurbishment’, in which office space undergoes a transformation based on the exposure and enhancement of the existing building's features, including exposed brickwork and high, open ceilings. One such building which provides occupiers in this sector with ‘defurbished’ office space is Park House, Greyfriars Road. The owners of this building have successfully created the type of office space provided in such locations as Shoreditch in London, where a number of the tech and creative sectors are clustering.

From Savills most recent 'What Workers Want' survey, workers were most dissatisfied with lighting in the office. By stripping away the suspended ceilings and adopting exposed ceilings, this provides more natural light and has proved particularly effective on lower ground floor office space.   

There is still plenty of opportunity in Cardiff’s office market for landlords and tenants themselves that are willing to look at alternatives to new Grade A space, and it may even result in a happier workforce. 

Further information

Read more: Cardiff: Connecting the City