A lack of supply has started to take its toll on take-up in the South West office market, according to Alder King’s market monitor.
The agent said that despite a strong year in terms of demand, supply in key centres, notably Bristol, Exeter, Gloucester and Swindon, was of increasing concern.
According to the report, office take-up amounted to 1.9m sq ft last year, compared to 2.2m in 2014, due both to a shortage of grade-A space and secondary space lost through permitted development rights.
By the end of 2015, availability had fallen to just 3.2m sq ft, 30% below the five-year average.
Meanwhile, take up in the industrial market of 5.9m sq ft, a rise of 18% on 2014, meant availability stood at just 4.3m sq ft, 40% down on the 10-year average.
Alder King head of agency Simon Price said: “The constrained supply in many locations, demand pressure and the prospect of rental growth increasingly support the case for further development.
“New speculative developments and good quality refurbishment schemes will come forward in 2016 to deliver much-needed stock.”
Alder King said the South West remains attractive to investors looking for value outside London, with Bristol securing the lion’s share of investment in 2015 with £600m of transactions, and Bristol’s office market accounting for 71% of the city’s investment transactions.
The two largest deals were the off-market acquisition of 10 Templeback by Orchard Street from Benson Elliott for £58.6m, a 5.3% yield, and the sale by Skanska of 66 Queen Square (pictured) to Aviva for £32.78m, a 4.9% yield.
To send feedback, e-mail alex.peace@estategzette.com or Tweet @egalexpeace or @estatesgazette
