As with regional office markets across the country, a theme we’re predicting for Bristol in 2025 is a period of undersupply of quality stock. A total of 705,021 sq ft of new and refurbished space is expected to complete by the end of the year across developments including The Welcome Building, 3 Rivergate and The Crescent, leaving the city’s grade A availability rate standing at 2.5%.
There is a further 81,000 sq ft of refurbishment projects currently under way and due to complete in 2026, but we need to see more new office development in the pipeline if the city is to continue to be an attractive place to do business in the longer term.
Following the immediate switch to home working during the pandemic, businesses are now starting to adjust closer to pre-Covid working practices, and although hybrid working is a trend that seems here to stay, many are spending more time back in offices.
More businesses are also mandating a minimum number of days in the office, and this trend is expected to continue in 2025. With that has come the flight to quality, with occupiers looking to invest in high quality spaces which have the ESG credentials that employees value.
The push for greener buildings is also prompting more landlords to consider comprehensive refurbishments or redevelopments, often leading to discussions about mixed-use conversions. This presents an opportunity to align sustainability investments with broader asset transformation.
Although more office stock is needed, developers remain cautious, with borrowing and construction costs still high and limited downward pressure on yields.
In the short-to-medium term, we expect that supply in Bristol will continue to be restricted without significant market shift to help bring new developments forward. We have already seen significant rent increases, as developers implement the kind of sustainable measures that modern occupiers are demanding.
This is undoubtedly a challenge, however in Bristol we have seen that despite the tough economic climate, businesses are prepared to pay more to achieve the best space because of that flight to quality. Bristol has demonstrated that occupiers are prepared to pay a premium if the product is right.
The city saw one of the largest prime rent increases in the country in 2024, reaching close to £50.00 per sq ft, an increase of 18%, which bodes well for 2025, especially for those looking to invest in new developments in the city.
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