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Alex Easton, DTZ Associate Director Cardiff Office, Provides Market Summary For Cardiff

Alex Easton, DTZ Associate Director Cardiff Office, Provides Market Summary For CardiffCardiff take-up (both in and out of town) was once again resilient in 2011 with over 110 deals concluded totalling 635,000 sq ft. A record high for the City centre, driven by Admiral Insurance’s 195,000 City centre pre-let.

2011 Highlights included increased call centre activity resulting in 118 Limited who took 35,500 sq ft at Fusion Point, Tresillium Terrace, Serco / Listening Group who acquired 46,000 sq ft at Hodge House, St Mary Street and Fraser Kidd (rumoured to be acting for First Source) who have an outstanding c.20,000 sq ft requirement.

The legal sector was also active, with lease renewals concluded to MLM Cartwright and Thompsons Solicitors (7,200 and 8,000 sq ft respectively) at Fitzalan Court, Newport Road, Dolmans’ relocation from Windsor Place to 8,500 sq ft at One Kingsway toward the beginning of the year and Hugh James, Morgan Cole and Berry Smith, all of whom have ‘live’ requirements as we enter 2012.

Other notable lettings last year included Inexus (20,120 sq ft) at JR Smart’s Driscoll Buildings, Capital Quarter, Cardiff Community Housing committing to 14,000 sq ft at Charnwood Group’s Tolven Court, Ocean Way, Ocean Park and Hugh James / Involegal and Deloitte who took 18,800 sq ft and 9,900 sq ft respectively at Robert Hitchins’ Fusion Point 2 (leaving just over 12,000 sq ft remaining).

With Grade ‘A’ stock now standing at sub 50,000 sq ft (less than a single year’s supply at current take up levels), quality, well located Grade ‘B’ refurbishments are likely to experience renewed interest.

Interestingly, a number of Grade ‘B’ have already performed well over the past 12 months or so....... who would have thought two years ago that the likes of Brunel House and Eastgate House would be filling up (albeit on flexible and incentivised lease terms) and experiencing close to full occupancy?

At the same time, a number of older, obsolete buildings are being converted, or ‘earmarked’ for alternative uses. The upper parts of Principality Buildings now accommodate a Travelodge Hotel and UBS, the owners of Dominions House, Dominions Arcade (off Queen Street) are in for planning, again for hotel use with an operator in tow. In addition, Summit House, Windsor Place has been acquired for student accommodation.

There is welcome activity by JR Smart at Capital Quarter where a further 75,000 sq ft office building is underway as part of their mixed use scheme and out of town, Office Visions have made a start on their 35,000 sq ft ‘Vision Court’, Pentwyn scheme. Both will be well placed in 2012 /13 to secure occupiers seeking Grade ‘A’ space in the face of limited competition.
Highlights for 2012? Legal & General, Hugh James and Morgan Cole, as mentioned, all have sizeable, ‘live’ requirements (30,000 sq ft minimum) and are likely to agree pre-lets over the forthcoming year. New Builds will be an option and therefore a catalyst for further development, potentially at MEPC’s Callaghan Square, Robert Hitchings’ Fusion Point 3 and the well reported Central Square scheme, where Cardiff Council and the Welsh Government has committed funds for a new bus station, public square and convention centre as well as major improvements to the traffic infrastructure around Callaghan Square.

There is no doubt however that the market will remain challenging this year and has already started on a negative note with news from BNP Paribas of their proposed Cardiff and Manchester office closures. This is apparently to concentrate on more active, London and the South East of England markets and is a clear reflection of poor market sentiment throughout the regions.

Posted by Michael Gillespie (wantspacegotspace Limited) on 24th January 2012 (updated 09/04/2013)

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