The West Country is facing its biggest surge in speculative development projects for more than five years, according to some of the region’s leading agents. With office space in Bristol at its lowest since the downturn of 2008 and industrial availability at just 2.75m sq ft — the city’s lowest for 10 years — agents Alder King predicts this coming year will see the momentum for speculative industrial schemes and design and build projects gathering pace.
The amount of office floorspace currently available in Bristol is 2.38m sq ft, down from 2.55m sq ft just a month ago. And supply will fall still further with around half-a-million square feet of secondary offices about to be converted to residential use. All this, warns Alder King, is expected to push rental levels over the £27.50 per sq ft mark.
Further afield the initiation of speculative projects is likely to be slower, but will grow as existing property is taken off the market. Commercial property consultancy Myddelton & Major says it has sealed ten separate deals on Frome’s Commerce Park in the last six months alone. With 700,000sq ft of mixed-use units the 64-acre site is Somerset’s largest business park.
“This series of deals is more evidence that the economy is on the up,” said Philip Holford, a partner at Salisbury-based Myddelton & Major. “Owner-occupiers who have bought their own units now have the security to grow and prosper, while the number of units bought as investments shows that confidence is returning to the West Country property market.”
The pressure on office availability continued into Gloucestershire where the Oak Tree Capital-owned Pegasus Life intends to turn St George’s House in Bayshill Road, Cheltenham — the 56,500sq ft former Kraft Food head office — into retirement apartments.
And in Bath recent research indicated there was a 39 per cent increase in the uptake of city centre office space during 2013, compared to two years earlier. The two biggest relocations last year were local solicitors Withy King moving its offices to Midland Bridge House and high-tech engineers Altran expanding to St Lawrence Court, SouthGate.
“The last few years have been challenging, but we are now starting to see genuine confidence returning from entrepreneurs, industrialists, professionals and importantly, even the banks,” said commercial property agent Simon Noyes-Lewis.
Launched in 2007, his company completed a range of deals throughout 2013, including the acquisition of 16,000sq ft of industrial space for Edgewest Plastics in Tewkesbury, locating and overseeing the purchase of 4,500sq ft of office and storage space in Andoversford for the Cotswolds-based hospitality group, The Lucky Onion, and the sale of Novellini House, a 26,300sq ft of office and storage complex on the Orchard Trading Estate, near Tewkesbury.
“Whilst demand for commercial property has improved, there is still an air of caution and it may still be a while before we see the market forge ahead again,” added Noyes-Lewis.