The tide may now be turning in favour of office refurbishments instead of conversion.
Head of Agency Paul Williams said: “There were fears the Government’s decision to make office-resi permitted development rights permanent could trigger another burst of such schemes in Bristol, despite the fact that Bristol city centre has already seen in the region of 1 million square feet of office space lost over the past three years.
“Whilst some of these buildings were undoubtedly past their sell by date as offices, we were growing increasingly concerned that further conversions would leave SME’s struggling to find suitable accommodation to enable their businesses to grow and develop.
“But so far the expected deluge of office conversions to residential hasn’t materialised. Instead, the lack of office space has seen office rents rising significantly over the past 12 months, which is good news for landlords and investors, if less so for tenants.
“What this does mean, however, is that landlords are now much more likely to consider investing in buildings to refurbish tired office space rather than jump on the conversion bandwagon.”
Paul added: “With very little new build coming on to the market, this has sharpened demand across the board, and provided further scope for rent increases, with most commentators agreeing that the benchmark of £30 per sq ft for new ‘Grade A’ space is highly likely to be exceeded by the end of 2016.
“Rents are also rising fast on secondary space, driven by the falling level of supply, and in some cases quoting rents have almost doubled in a 12-18 month period.
“Whilst Bristol needs more Grade A accommodation in order to fulfil its potential as a major regional hub and an attractive centre for inward investment, there are already several large office schemes in gestation to address this need.
“However it’s also crucial that landlords are willing to refurbish existing premises to meet the needs of the SME sector, often referred to as the ‘engine-room of the economy’.
“We are therefore delighted to see such activity taking place in buildings such as the Pithay, once earmarked for conversion but now under refurbishment to provide accommodation specifically targeted at the creative, media and technology sector, and the Brewhouse (formerly Company House) which was launched in 2015 and where several recently publicised lettings have underlined the benefits of this approach.”