Bristol’s business reputation continues to prosper

Bristol 1

The reputation of Bristol as a city and its surrounding area continues to prosper, according to Avison Young’s newly released 2022 Forecast: Bristol.

The city’s economy is due to grow by 6.2 per cent during the coming year, with sectors including hospitality, tech, communications, and education all underpinning employment growth. In fact, the local workforce is forecast to be 2.6 per cent higher than it was at the end of 2019.

Jo Davis, regional managing director at commercial real estate adviser Avison Young, said: “Bristol is a very attractive place to do business. Rail travel times to London have improved following the partial electrification of the line. Bristol’s Clean Air Zone will come into place during the course of 2022 and the city’s reputation as forward-thinking on climate change remains strong.

“Across the commercial real estate sectors, we are seeing positivity and an optimism for 2022.”

Within the offices market, 2021 was an encouraging year for occupier activity, with the BBC’s commitment to the city perhaps the headline deal. Bristol continues to see an increased demand for flexible workspace providers, with both Runway East and DeskLodge taking space in 2021. The education sector also underpinned the market, with Bristol University recording the largest letting of the year at 1 Trinity Quay, and BIMM (The British and Irish Modern Music University) acquiring St James House, both for new teaching facilities.

Demand for Grade A space continues to be relatively robust, with the second-hand letting environment seeing a greater impact. There is continued development appetite with several schemes on site, including CEG’s 184,000 sq ft EQ, the 200,000 sq ft Wellcome building and the next phase of Assembly, 120,000 sq ft. In addition, the comprehensive refurbishments of Tower House and the Crescent Centre are due to come to market in 2022.

The industrial & logistics sector is expecting the rebound in the manufacturing economy to continue, with the number of warehousing jobs forecast to grow by 1.1% during the year. Strong demand for space, with limited supply will continue to be the story across the South West.

The lack of any strategic sites for industrial development, aging stock and competition from alternative land uses is continuing to drive occupiers out of the city to Severnside and beyond. This is also set against pressures in the market for ‘last mile‘ delivery and internet fulfilment occupiers who demand city centre locations. The combination of these factors, alongside other forces from the strongest industrial market for 20 years,  is a pattern of rising rents and land value growth for any stock available. Notable recent moves included Oxford Instruments Plasma Tech moving from Yatton and Bart Ingredients expanding to Avonmouth, a total of 250,000 sq ft combined. DFS have also recently taken 244,000 sq ft of logistics space in Bristol, confirming the strategic location we have in Bristol supporting UK business.

Total industrial space take-up for 2021 in greater Bristol was 2.63m sq ft and 211.69 acres of land was sold or let (IAS). This is an increase of 13% on 2020 and an increase year on year for the past 4 years reflecting the underlying growth of the city in this key employment sector.

2022 is set to be a huge year for the logistics market with a build out of up to 2.5 m sq ft of speculative warehousing alongside the M49 and a vast range of corresponding job and supply chain opportunities available.

The strong demand for housing has been reflected in Bristol’s land market and Avison Young expects this to continue to be very competitive in 2022, although the timeline for adoption of local plans casts a shadow over housing targets and potential new development sites. Unsurprisingly, suburban Bristol locations outperformed the more central area and experienced very strong demand from movers looking to relocate and/or upsize, driven by the city’s mix of transport connectivity, culture, broad economy and relative affordability.

The region’s leisure offering is evolving. Cribbs Causeway is seeing a cluster of new openings nearby, with the surfing lagoon at The Wave making up part of the offer. Construction will finally start on the new YTL Arena (the former Brabazon Hangar site in Filton) this year and plans will be submitted to redevelop the site of Bristol Zoo, which will relocate from Clifton to its Wild Place Project site at Cribbs Causeway, both anticipating 2024 openings.

The city diverse hospitality offering remains attractive and will also continue to evolve – Breaking Bread on The Downs has been a magnet, whilst reduced footfall on the high street during times of lockdown created an opportunity for Bristol City Council to increase pedestrianisation and on-street dining opportunities.

Whilst the woes on the high street continue, with retail vacancy across Bristol now as high as 19.7 per cent, up to 2 million sq ft of retail space in the city centre will be eroded over the next few years; the Galleries shopping centre will be the subject of mixed-use redevelopment plans; a preferred bidder has been appointed to redevelop the former Debenhams building and AEW has acquired four mixed use properties in the city centre for “significant redevelopment”.

Jo added: “The future is bright for our city, with people keen to get back to a sense of normality. With a strong uptick in the global economy, and the lessons learned from living with Covid, money is being driven into real estate, with industrial and residential continuing to be the focus of investor interest.

“We entered 2021 in a state of economic upheaval and uncertainty but exited the year with recovery very much the watchword. We have seen growth in the economy, and occupiers and investors alike are adapting to change and the new challenges we face. While omicron casts a shadow, the UK’s commercial real estate sector continues to show resilience and potential in equal measure. The pandemic has reshaped our industry but there is an opportunity to re-examine how our buildings and places can be leveraged to positively impact our economies, communities and the environment.”