Alder King reports subdued commercial activity in West in first half of 2023

The West's commercial property market was subdued in the first half of 2023 as pressures in the wider economy filtered through to the sector, according to the latest Market Monitor from Bristol and Swindon--based property consultants Alder King.

Concerns over inflation and rising interest rates impacted business decision-making whilst increased construction costs and yield shift made new development less viable, says the report.

As a result, H1 office and industrial take-up in the locations featured in the report are significantly down on the same period last year.

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But the consultants say the indicators for the next six months are much more positive – inflation is falling, business investment is forecast to rise and the volume of active requirements, together with the number of transactions already in solicitors’ hands, are likely to translate into a much stronger second half.

And, they add, the reduced level of new development because of the recent economic factors is likely to result in an increased shortage of top end supply in many locations from early 2024 onwards which, when coupled with the existing lack of good quality second hand available space, could continue to impact take-up.

In Bristol, H1 office take-up in Bristol was down against the five-year average, said consultant Simon Price.

Most occupier focus is now on new/newly refurbished space offering the best ESG credentials and occupier amenities. An increasing amount of take-up is likely to be of new Grade A space with over 27 per cent of the new space currently under construction in the city centre already let or under offer, he said.

Meanwhile, Bristol’s industrial and logistics H1 take-up was down by 37 per cent on the same period in 2022, constrained by the lack of immediately available space and uncertainty following last year’s Autumn Budget, said consultant Andrew Ridler.

And there is better news in the retail sector, with good activity and a number of deals completing during the first half of the year, according to consultant Rebecca Harries. Demand is higher than pre-2020, with the food and beverage, health and fitness, and beauty sectors being the most active.

In Bath, says consultant Tom Dugay, city centre Grade A supply is much healthier following the completion of the Bath Quays development and several comprehensive refurbishments, giving occupiers a choice which has been lacking in recent years.

Demand for centrally located units is strong and the number of deals completed across Bath is the highest it has been for several years, driven in part by rent reductions.

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In Swindon, the occupier trend for better quality space is "clearly here to stay," says consultant James Gregory, citing BLB Solicitors' move to the 4,000 sq ft ground floor of Churchward House, Colas Rail taking 5,500 sq ft at Edison Park, and Bespoke Guardians leasing 3,000 sq ft at Delta Office Park.

Edge of town retail parks have very few vacancies, while demand from small independent retailers in Old Town and the town centre remains positive and the council’s investment of £33 million to create the Bus Boulevard on Fleming Way is having a positive effect on the town centre.

Key transactions for the firm in the first six months of the year include the freehold disposal of the 23,367 sq ft former Travis Perkins Depot in Bristol, the disposal of the 22,519 sq ft Nibley Court at Westerleigh Business Park in Yate, and the sale and leasehold disposals for Verve Investments of the 23,000 sq ft Phase 4 development at Paintworks, Bristol (pictured).