Take-up in the Cardiff office market during 2016 is expected to reach 670,000 sq ft – a 15-year high, according to Savills.
This figure surpasses the 615,000 sq ft of take-up in 2015 and is 34% above the 10-year average of 500,000 sq ft for the city.
Professional and legal services led the occupier mix, accounting for high-profile deals including Hugh James’s 100,000 sq ft prelet at 2 Central Square; Motonovo Finance taking 71,000 sq ft at 1 Central Square and HMRC taking 54,000 sq ft at 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 sq ft. Grade A rents are expected to remain at £25 per sq ft in 2017.
Gary Carver, director of the business space team at Savills Cardiff, said: “Office take-up in Cardiff reached exceptional levels in 2016. The city benefitted from many high-profile deals and the emergence of the city as a TMT hub.
“Looking ahead to 2017, One Canal Parade and 3 Capital Quarter are due to complete in 2017, reducing the demand pressure on Grade A space. The proposed 270,000 sq ft prelet to HMRC in Central Square and two deals of more than 30,000 sq ft that are expected to complete in January will ensure 2017 take-up remains at the same high level we saw in 2016.”
Savills predicts investment in Cardiff offices will reach circa £150m for 2016, from £136m in 2015, with overseas buyers taking particular interest in larger lot sizes such as 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. The sale of The Levels on Capital Business Park, Cardiff, is an example of a multi-let industrial estate that provides both asset management opportunities and attractive yield.
• To send feedback, e-mail shekha.vyas@estatesgazette.com or tweet @ShekhaV or @estatesgazette
