Viewpoint from a regional investment agent: As I sit in my actual office, in front of my actual PC, I reflect on the first half of 2020 as a Bristol based investment agent, and conclude it was pretty much as expected and reflective of the UK investment market as a whole. In short, it was dire.
However, although investment volumes are down on corresponding figures from 12 months ago (in 2019, investment volumes in Bristol totalled £650m; currently, it stands at circa £70m) we should certainly have a feeling of optimism for the second half of the year. It’s actually not as bad as it could be.
In Bristol, we’ve got plenty of irons in the fire. Lockdown deals rumoured to be under offer include The Assembly, a 200,000 sq. ft grade A office building that has been pre-let to BT plc. Sitting at £140m, it will be Bristol’s biggest ever office investment deal and, at 4.5% net initial yield, pricing is at pre-covid levels.
Offices remain in demand in the regional city, and another significant deal that transacted this year is Halo at Finzels Reach. It’s a 116,000 sq. ft grade A office building, not yet built, which is being forward-funded by Tesco Pension Fund at circa 5.6% net initial yield. Some 74,000 sq. ft has been pre-let to lawyers Osborne Clarke, who are moving from nearby Temple Quay, but 42,000 sq. ft remains vacant and available to let once completed, meaning more deals to come in the months ahead.
A crop of naysayers are currently predicting the demise of the office. However, these two substantial regional investment deals, and the fact that the Bristol office take-up for the first half of 2020 outperformed the same period last year, suggest to me that these forecasts are a tad premature.