The battle for office space in Bristol is now so fierce, major occupiers are starting to plan moves up to five years ahead. That’s not what businesses here are used to. Typically, most would start planning a couple of years ahead of the end of their lease, but that’s rapidly becoming a high-risk strategy. That’s […] View ArticleView full article ...
The battle for office space in Bristol is now so fierce, major occupiers are starting to plan moves up to five years ahead. That’s not what businesses here are used to. Typically, most would start planning a couple of years ahead of the end of their lease, but that’s rapidly becoming a high-risk strategy. That’s so much easier said than done, I know. But there’s no getting away from it – we’re now looking at the lowest availability of office space in over 20 years. And if we don’t start getting more development underway soon, the impact on Bristol-based occupiers and the wider Bristol economy will be significant.
The city of Bristol is thriving, now collecting global accolades in everything from the New York Times to National Geographic. It is most definitely on the world map. And with that comes competition for space. We are now facing a squeeze on property, much like that seen in Manchester and Birmingham in recent years – where the supply of office space – across all grades – is failing to keep up with demand. The difference between Bristol and the likes of Birmingham and Manchester though, is the near dearth of cranes in the South West’s skies.
Not only does the shortage of development mean far longer lead-in times for occupiers, it will inevitably push up rents too. The most recent deal on Aurora, the landmark green office building being developed speculatively by Cubex at Finzels Reach, was struck on £32.50 per square foot. And already that’s looking like a pretty good deal for law firm Simmons & Simmons as prices on remaining floors are expected to climb towards £35 per square foot, because there is simply nothing in Bristol to rival it in terms of quality, services, environmental credentials and style. Dyson recently paid £32.50 per square foot for One Cathedral Square and that was a Grade A refurbishment, rather than newly built.
And it’s not just property prices going up. There is the inexorable rise of energy prices too. So in fact, going green is one way to stay out of the red. The only building outside London and one of just six in the UK to achieve the BREEAM ‘Outstanding’ award under the new, toughest rating scheme, Aurora will offer its tenants huge savings in terms of energy bills and running costs, thanks to rooftop mounted solar panels, intelligent LED lighting and water saving technology. Enough to equate to around £2 per square foot, which can make quite a difference to the bottom line.
So why are businesses heading West? We know from interest in Aurora that there is a major drive amongst financial and professional services companies to relocate from the expensive and saturated South East and as mergers and acquisitions take place in the wider pursuit of cost savings. To that end, recruitment and retention of talent is high on the agenda of many a legal and financial services firm here, which means quality of life, staff wellbeing and the working environment count as they have never counted before.
We are some way off the level of development required in Bristol to service the growing demand for offices. This is why long-term space planning for expanding businesses is now mission critical. This applies as much to new, fast-growing tech businesses and market disruptors as it does to the established legal and financial business community which have long been a mainstay of the Bristol economy. For major businesses in Manchester and Birmingham, it is not unusual to start planning five or more years before their lease is up. It’s time for Bristol occupiers to follow their lead.
Martin Booth, Knight FrankClose