Booming office market hits a 15-year high
CARDIFF’S commercial property market is booming with 2016 seeing the highest take-up of space for 15 years.
According to property advisory firm Savills, some 670,000sq ft of letting deals were struck.
The level exceeds the 615,000sq ft in 2015 and is 34% above the 10-year average of 500,000sq ft for the city.
The firm notes that the high level of take up was driven by an above average number of large deals and pre-lets, including:
Law firm Hugh James taking 100,000sq ft at Two Central Square
Motonovo Finance taking 71,000sq ft at One Central Square
HMRC taking 54,000sq ft Brunel House
Demand for Grade A space pushed rents up in 2016, with average headline rents rising by 14% over the year from £22 to £25 per square foot. It is anticipated that Grade A rents will remain at £25 per square foot in 2017.
Gary Carver, director of the business space team at Savills Cardiff, said: “Take up of office space in Cardiff reached exceptional levels in 2016.
“The at city benefited from many high-profile deals throughout the year and the emergence of the city as a technology, media and telecommunications hub.
“Looking ahead to 2017, One Canal Parade and 3 Capital Quarter are due to complete – reducing the demand pressure on Grade A space.
“The proposed 270,000sq ft prelet to HMRC in Central Square and two deals over 30,000sq ft which are expected to complete in January, will ensure take up levels in 2017 remain at the same high levels we saw in 2016.”
Savills predicts investment into Cardiff offices reached £150m for 2016, against £136m in 2015, with overseas buyers taking particular interest in larger lot sizes such as No 1 Capital Quarter acquired by Golden Gate Capital and the BT Data Centre acquired by Keppell.
Despite a slower second half of the year, property companies and private investors remained active, but were careful in stock selection.
Ross Griffin, director in the investment team at Savills’ Cardiff office said: “The Cardiff investment market had a robust year in 2016 with the city being of interest to a broad cross sector of investors.
“Sentiment for the year ahead remains positive and there is a perception of greater value to be sought outside of London and the South East.”