Having endured the impact of the Covid-19 Pandemic, we were faced with the largely unexpected impact of the conflict in Ukraine, inflationary pressures and rising interest rates which created further turbulence and uncertainly in the market.
As a result, take up in both Bristol city centre and the out of town office markets declined in 2023, however enquiry levels have picked up significantly since the start of 2024 with the first Quarter experiencing a strong take up of c 127,000 sq ft, a 54% improvement on the same period as last year and just below the 5 year average.
The outlook for Bristol city centre offices remains positive as supply remains historically low due in the main to some 1.5 million square feet of older office stock being removed from the market for residential development since the advent of Permitted Development, following the last recession. As a result, rents have held firm and even during the last year when demand slowed, Grade A city centre office rental levels increased by c £4.00 psf to a new high of £46.00 psf.
The out-of-town market has also seen a promising start to 2024 with the first quarter’s take up of 54,200 sq ft, a 57% improvement of Q1 2023 and in line with the 5 year average. Out of town does however continue to lag behind the city centre, held back partly by the oversupply of older, un-refurbished space and impacted further by the resurgence in popularity of city centre offices, where onsite car parking is no longer a priority and employees can readily walk or cycle to their place of work and benefit from an abundance of amenities close by. There is still demand for higher quality refurbished offices out of town, where those businesses benefit from access to the motorway network and therefore still require a good ratio of car parking.
Burston Cook remain the most active office agency in Bristol having handled more transactions each year over the last decade than any of our competitors.
The last 3 years have been particularly challenging for the retail sector with 1000’s of sites closing across the UK – the highest number for many years. Less affluent town high streets and retail shopping centres suffered the most, however, supermarket anchored retail centres performed well as consumers are drawn to the best supermarket offerings. Affluent market towns have weathered the storm relatively well and suburban and neighborhood retail areas have also performed well around Bristol as the trend to support local and independent retailers has increased significantly since the Covid lock down of 2000.
In Bristol, despite the tough and challenging trading conditions created by the cost-of-living crisis, high levels of inflation and rising interest rates, Burston Cook continue to generate a high number of enquiries, resulting in a healthy volume of lease completions across the city in the last 12 months. During this time we have secured over 50 retail disposals throughout the city.
The majority of take up in Bristol is driven by smaller independent businesses which have long been the mainstay of the Bristol retail market. In particular, properties which offer rent rolls of less than £25k a year combined with no, or low business rates tend to generate the highest levels of demand.
Vacancy levels have fallen in locations such as Park Street and Whiteladies Road. Popular neighbourhood shopping areas such as Clifton Village, Southville and Gloucester Road continue to generate strong demand with rentals holding up well, and in some cases increasing.
Broadmead shopping centre continues to struggle and like most post war retail centres in major cities throughout the UK, there are high vacancy levels and whilst some major vacant buildings in these centres are destined for student / residential conversion, the scale of vacancies and the future of these centres can only be addressed by a co-ordinated large scale redesign and development in the coming decades.
Bristol’s other major retail destination, Cribbs Causeway, has fought back well since Covid and remains a very popular retail location offering shoppers extensive onsite parking and an excellent mix of high quality shops, within a safe and uplifting shopping environment.
The restaurant sector has certainly faced very testing times and sadly we have seen a number of very good, independent restaurants struggling to stay afloat. This being said, there remains good demand for well positioned units, with some of the best independent restaurants and chains continuing to thrive. The likes of Pasture, Cote, Little French, Wilsons, Bosco, New Moon and Nutmeg remain a sell out as they tick all the essential boxes – atmosphere, service, quality and value.
Whilst we anticipate more retail stock coming back to the market throughout 2024 and into 2025, Burston Cook remain positive that there will be relatively good levels of demand to fill vacant units particularly in popular city centre and neighbourhood retail pitches across Bristol.
Burston Cook have handled more retail transactions in and around Bristol in the last 3 years than any other agency, and as a result of this we have been able to grow our retail department.
Following on from the unexpected demand received for industrial and logistics space from 2020 onwards, the heat has eased during the last 12 months, but demand remains healthy with limited supply across most sectors of the Bristol market. More recent economic uncertainly has stalled some of the mid and big box requirements.
Demand continues to be driven by e-commerce and the logistic providers seeking to improve and expand the efficiency of their networks. Supply of immediately available stock is a continuing concern with shortages of materials impacting delivery of new space. It is not unusual to have parties competing to secure freehold opportunities and leasehold accommodation. There is a particular shortage of smaller sized units. This has led to rents and capital values increasing although the current economic uncertainty seems to be having an effect with rents levelling off. The new Clean Air Zone has had an impact on occupier’s decision making processes with a focus on areas which are least affected by it.
There have been numerous challenges for the car manufacturer and dealership sectors in the last few years due to Brexit and COVID-19, however supply is starting to return and align with high demand, with a positive outlook predicted for 2024. Traditional car dealerships will continue to be impacted by the agency dealership model – a model set to cause further change with dealers needing to display fewer vehicles in their showrooms and therefore requiring smaller properties. This is leading to dealerships housing multiple franchises or disposing of their surplus property, meaning more dealership properties being brought to the market.
The accident repair market, in which Burston Cook is active nationally, has been growing over the years driven by several factors including increased traffic density, rising repair cost, higher used car values and a rise in the average driving age. There has been a plethora of M & A activity in the sector over the last couple of years and ARC’s are having to invest in expanding their EV repair capability and keeping up with changing technology and systems in the automotive industry.
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