We hope you find this report interesting. If you have any queries in relation to flexible workspace, please contact me at douglas@gkre.co.uk.

Bristol is one of the UK’s most vibrant

and successful cities, which earlier

this year topped the Sunday Times list of

the Best Places to Live in Britain Guide.

This report will give you the inside track

on Bristol’s local flexible workspace market, the office market as a whole and the area’s economic prospects. Like

our previous report on Leeds, it has

been produced in conjunction with the

Business Centre Association (BCA).

The city’s economic outlook is extremely positive and its economic growth is

expected to outperform the rest of the United Kingdom by 2020.

One of the drivers of this growth is the

West of England’s status as one of the

UK’s fastest-growing digital tech clusters.

This is estimated to have attracted

more than 110 companies to the region

to date, created 3,000 jobs and added

£200m to the regional economy.

There is a shortage of supply of office space in Bristol and this, together with

the economic factors identified in this report, make us extremely positive about Bristol’s flexible space market.

We expect significant growth in the market in the year ahead, both in the city

centre and surrounding areas.

Highlights of this report include:

• The current state of the Bristol flexible market, including a table showing

operators in the city

• Where Grade A rents are expected to be by the end of 2017

• The factors behind Bristol’s

anticipated economic growth

of 15.7% by 2026

• Information about Bristol’s tech-

hub, centred around Bristol’s Temple

Quarter Enterprise Zone – one of

the UK’s largest urban regeneration

projects

• Reasons behind Bristol’s shortage of

Grade A stock

• Plans for ‘pro-working’ in the city. We

ask if this is the future of co-working?

BRISTOL– THE FLEXIBLE WORKSPACE MARKET

WELCOME FROM GKRE DIRECTOR, DOUGLAS GREEN

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BS4

BS2

BS1

BS3

BS2

BS5

BS16

BS7

BS6

BS8

BS9

LOCATION OF CENTRES

Bristol’s flexible space market is based in three main areas. The heart of the market is

in the city centre, BS1 and BS2, which as a

result of major roadworks and the creation

of the Temple Quarter Enterprise Zone

has in recent years moved towards the

area around Temple Meads railway station.

Major occupiers in the area now include,

IBM, BT, Deloitte, Burges Salmon and

Bank of Ireland.

Aztec West, a business park 10 miles north

of Bristol and close to the M4 and M5

motorways is another popular area, with

Citibase and Regus among operators with

centres there. The other main location

for flexible space is Clifton (BS8), which is popular with businesses that support the

nearby university.

Current office supply in Bristol’s is at a very low level – in the summer, it stood at

585,513 sq ft, of which only 166,000 was Grade A space (equal to around 12 months’ demand). This is likely to impact on the

growth of the flexible space market in the city centre.

OPERATORS

All the main national operators have a

presence in Bristol including Regus (five centres), BE Offices (two centres), Citibase, i2 Office, Orega and The Office Group. It is also home to established independents

including Independent Business Centres

(IBC), a specialist provider with locations in

Bristol, Yate and Southampton.

Much of the flexible space in Bristol is traditional serviced office space though

NAME OF CENTRE LOCATION OPERATOR

Citypoint Temple Gate, BS1 6 BE Offices

Orega Bristol Ten Victoria Street, BS1 Orega

Bristol Castlemead Lower Castle Street, BS1 Regus

Bristol Temple Quay 1 Friary, Temple Quay, BS1 Regus

Bristol Broad Quay Broad Quay House, Prince Street, BS1 Regus

Bristol Temple Quay Bristol Temple Quay, BS1 i2 Office

Bristol Wapping Wharf Jubilee House Business Centre, Wharf, BS1 Independent Business Centres

Unity Street Business

Centre7 Unity Street, BS1 Independent Business Centres

Bristol Old City 1 Little King Street, BS1 Independent Business Centres

Bristol Park Street 2 Park Street, BS1 Independent Business Centres

Harbourside Business

Centre70 Prince Street, BS1 Independent Business Centres

The Office Bristol St Nicholas House, 31-34 High Street, BS1 The Office Group

Desklodge 5th Floor, 1 Temple Way, BS2 Desklodge

Westpoint 78 Queens Road, Bristol, Avon, BS8 BE Offices

Leigh Court Business

CentreAbbots Leigh, Bristol, Avon, BS8 GWE Business West

Bristol Clifton 37 Regent Street, BS8 Independent Business Centres

Citibase Bristol Business Park

Argentum House, 510 Bristol Bus Park, BS16 Citibase

Citibase Bristol Aztec West

Aztec West, BS32 Citibase

Bristol Aztec West 2430/2440 The Quadrant, Aztec West, BS32 Regus

Almondsbury Business Park

Redwood House, Brotherswood Ct, BS32 Regus

Fromeforde House Church Road, Yate, BS37 Independent Business Centres

BRISTOL FLEXIBLE SPACE MARKET – NOVEMBER 2017

Central Bristol postcodes (BS32 and BS37 not shown)

there are other options for occupiers.

Desklodge’s centre at the former Evening

Post building in BS2 offers a range of

‘hot desking’ (effectively co-working)

options, including drop in and pay as you

go, monthly packages and even ‘personal

pods’. Desklodge’s Jamie Ellis says that

co-working and flexible workspace “matches perfectly with Bristol’s forward

thinking culture and start-up, SME scene”.

IBC offers co-working at its Unity

Street centre, which director Matthew

Wofinden says “is a good stepping stone for those not yet in the market for a

full office and acts as a catalyst for us bringing people into our offices”.

BE Offices has noticed an increase in enquiries for co-working space, with occupiers now seeking offices with communal space for time away from

their desks. In response, it is introducing

‘pro-working’ at its centres in Temple

Meads (BS1) and Clifton (BS8). For more on this, see page 3 below.

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PRICES

Asking prices range from £250 to £400

per desk per month to around £125 to

£150 per month for co-working space

(with variations in terms of the quality of the space and packages available). IBC’s

Unity Street co-working space comes in

at the top end of that range and occupiers

get a private desk and use of facilities

such as coffee machines, cycle parking,

and showers.

There is no real difference between

prices in the central core and those in

Clifton and Aztec West. With such a

shortage of space in the city, Orega’s

Regional Sales Manager Amanda

Blakemore confirmed to us that prices remain strong.

FLEXIBLE SPACE OCCUPIERS

Bristol has a wide range of occupiers,

as one would expect in one of the South West’s major business areas. IBC’s

Matthew Wofinden says that occupiers in their buildings include“accountants,

solicitors, consultants and creatives”, with

Orega’s Amanda Blakemore referring to

similar occupiers as well as recruitment

agencies and engineering companies.

Desklodge has businesses ranging

in size from one to 40 people with a

strong presence from creative and tech

businesses. This is to be expected given Bristol’s status as a thriving tech hub

and, according to a recent survey, one of

the top six cities in the UK for start-ups.

The construction of the nearby Hinkley

Point C nuclear power station by EDF has led to some of its project teams

and associated contractors taking

flexible space in the city for the past couple of years. This is expected to continue or even expand in the years leading up to the power station’s

anticipated completion in 2027.

‘PRO-WORKING’ – THE EVOLUTION OF CO-WORKING?

BE Office believes that many co-working spaces are geared towards young

denim-clad entrepreneurs or youthful start-up enterprises and lack the

professional space or appearance than some more conventional and slightly

larger businesses require. As a result, it is introducing ‘pro-working’, which

it believes is emerging as an intermediary for professionals who desire a

collaborative workspace on a par with their corporate image. BE Office’s MD

David Saul says: “There can be no doubt that our clients are increasingly

aware of the rise in the co-working revolution but we are confident that they

will prefer the pro-working we are offering. It’s co-working all grown up!”

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PROSPECTS FOR THE MARKETLocal operators believe that Bristol

has weathered the Brexit storm and remains a popular location.

The city took the top accolade in the

2017 Sunday Times’s Best Places to

Live in Britain boasting “one of the lower

unemployment rates in the country,

varied and beautiful housing stock, decent

schools, buzzy culture and night life and

access to some fantastic countryside”.

With strong transport links and even faster

rail networks emerging this year, which will

see journey times to London cut to

80 minutes, we expect demand for flexible office space in Bristol to remain high. We anticipate new operators entering the

market and existing operators expanding their operations.

BRISTOL’S TECH HUB

Bristol is the one of the fastest growing

tech hubs in the UK, in part due to

Engine Shed, a collaboration between

Bristol City Council, the University of

Bristol and the West of England Local

Enterprise Partnership.

Engine’s Shed’s mission is to stimulate

long term economic growth by

supporting business, inspiring young

people to get involved and to showcase

to the public and potential inward

investors the exciting opportunities that exist in Bristol and Bath.

Engine Shed is based in Bristol’s Temple

Quarter Enterprise Zone, one of the

largest urban regeneration projects in

the UK, and home to a growing cluster

of small and start-up businesses,

particularly in the creative, digital and

hi-tech sectors.

The Bristol Temple Quarter aims to

attract 22,000 jobs over the 25-year

lifespan of the project (which started

in 2012). To date, over 3,000 jobs have

been created in the zone.

“Bristol’s Temple Quarter

Enterprise Zone is one of the

largest urban regeneration

projects in the UK”

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RECENT OFFICE ACTIVITY

Take up in Bristol city centre in Q3 2017 was 173,022 sq ft, compared to a five year quarterly average of 155,080 sq ft.

This follows a resurgence of letting activity in the city in 2016, with take up totalling

1,103,062 square feet . This exceeded the market average for the previous five years and was largely due to a series of larger deals, particularly for Grade A space. The result

is a shortage of supply, which is estimated to be at its lowest level in the city centre since

2002. In part, this is the result of there having been limited speculative building and also

due to buildings being lost to residential under permitted development.

The pre-let by HMRC of 3 Glass Wharf (107,000 sq ft) last year at £28psf was the largest deal for nine years. Major deals this year include University of Bristol acquring 31,785 sq ft of space at Augustine’s Courtyard and 13,480 sq ft at Templeback being let to corporate services provider Jordans. The TMT sector was responsible for

more lettings than any other sector in the first half of this year, its 78,345 sq ft mainly comprising smaller transaction.

Rents on Grade A stock were static at £28.50 psf in the first half of the year despite a lack of stock. However, with only around 585,000 sq ft of space available in Bristol city centre, a decline of 21% since the start of the year, it was anticipated that there would be

rent increases and this has now started to happen. A new record headline rent of

£30.50 psq was recently recorded in the city with Mewburn Ellis’s 13,300 sq ft pre-let at the Aurora building.

Recent major occupational transactions include:

• 3 Glass Wharf, Temple Quarter, BS2 – 107,000 sq ft pre-let to HMRC

• Bridgewater House, BS1 – 81,202 sq ft let to EDF Energy

• Augustine’s Courtyard, BS1 – 31,785 sq ft building sold to University of Bristol for £11.75m

The investment market

Bristol saw £56m of office investment in Q1 and Q2 2017, about half the 10-year average. However, more than £105m was transacted in Q3 of this year. This included

M&G’s purchases of 1 Georges Square for £26.2m (at a yield of 5.5%) and 66 Queen Square for £30.1m (5.3% yield).

Earlier this year, The Core, BS1 (63,123 sq ft) was sold to Direct Line for £15.20m, reflecting an initial yield of 4%

Data on this page from Savills and GVA

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UPCOMING ACTIVITY

There is some speculative Grade A activity in the city including:

• Assembly Bristol , a 300,000 sq ft mixed-use development by Bell Hammer within Bristol Temple Quarter Enterprise Zone. The

first phase of 180,000 sq ft is due for completion in 2018

• Aurora, Finzels Reach, 95,000 sq ft of Grade A office space in BS1, which is due to complete in Q1, 2018

• Aspire, 200,000 sq ft of Grade A office space in Bristol Temple Meads

• Glassfields, a 350,000 sq ft+ mixed-use office, hotel and leisure site in Temple Way. The first phase will be 36,500 sq ft of Grade A offices

FUTURE ACTIVITY

A couple of recent refurbishments that have reached the market have helped ease

the shortage of Grade A stock. These include 58,500 sq ft of Grade A space at One Cathedral Square, BS1 which is reportedly under offer already, with Dyson and the University of Bristol said to be taking two floors eaxh. Also, The Programme in All Saints Street, BS1 will deliver 50,000 sq ft this year, with a further 70,000 sq ft next year.

Savills reports that with space in such short supply, landlords are letting out second hand

space without having to undergo extensive refurbishments – occupiers are fitting out their own refurbished space. We believe this could provide opportunities for flexible space operators who classically look for this type of space.

Take up for Qs 3 and 4 of this year is expected to be around 750,000 should the Government Property Unit go ahead with a planned letting of circa 200,000 square feet.

Savills estimates that shortage of stock means rents could reach £32.50 by the end of

the year.

“Shortage of stock means rents

could reach £32.50 psf by the

end of the year”

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BRISTOL’S ECONOMY AND ECONOMIC PROSPECTS

Bristol saw economic growth of 2.4%

in 2016, placing it tenth in the UK

league table for city growth according

to The UK Powerhouse report by Irwin

Mitchell and the Centre for Business

& Economic research (Cebr).

Reasons for Bristol’s success include

its high share of creative businesses,

which is driving innovation in the city.

It estimates that Bristol’s economy

is set to grow by 15.7% by 2026.

EY’s UK Attractiveness Survey 2017

predicts that cities in southern England

(outside London) will outperform those in

the rest of England in terms of economic

growth in the period 2016 to 2019.

Bristol is projected to enjoy the fastest

employment growth, averaging 0.9% per year (creating 8,200 jobs), with accompanying gross value added

(GVA) growth of 2.0% per year. The

creative and tech industries are seen

as key drivers of the local economy.

Recent businesses that have invested

in the city include Rolls-Royce,

which has opened a new factory, and

business services provider Quantum

Advisory, which has opened an

office in Broad Quay House, BS1.

KEY STATISTICS

• Last year, inward investment created

1,800 jobs in the immediate area

• Since it was opened in 2013, Invest

Bristol & Bath, the agency that promotes

the region as a business location has

attracted 110 companies, creating

almost 3,000 jobs and generating almost

£200m to the regional economy

• Bristol has become one of the

fastest digital tech clusters in the UK,

much of the activity based in Bristol’s

Temple Quarter Enterprise Zone

• According to data released by Bristol

City Council, Bristol has the highest

rate of employment of all the UK’s

major cities. Its employment rate is

75.9%, a rise of 3.3% in the previous five years. The compares to the national average for the UK of 73.7%

“Reasons for Bristol’s success include its

high share of creative businesses, which is driving innovation

in the city”

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GKRE is the UK’s leading specialist flexible workspace agency. Founded in 2013, the directors bring to GKRE more than 25 years’ experience in the flexible workspace industry between them.

Our clients include operators and landlords across the UK, from major PLCs to

independent companies.

We have recently been involved in the merger and acquisition of businesses worth over £30m, comprising more than 360,000 square feet in some 50 buildings. On the agency side, we have acquired in excess of 400,000 square feet across the UK for 14 different operators.

GKRE advises landlords and building owners throughout the UK on their flexible workspace options and opportunities to partner with flexible workspace providers.

Please visit gkre.co.uk for more information on how we assist property owners, tenants

and flexible workspace operators, and for details of our latest transactions.

About GKRE

We have been nominated as both specialist and niche agent of the year by Estates Gazette and Property Week

11 Golden Square, London W1F 9JB020 3427 5679 www.gkre.co.uk

Douglas Green

E: douglas@gkre.co.uk

T: 020 3427 5678M: 07855 825 088

Will Kinnear, MRICS

E: will@gkre.co.uk

T: 020 3427 5677

M: 07811 942 752

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