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'Resilient' take-up of office space in Cardiff during Q1 2012

22nd May 2012
The commercial office market in Cardiff continues to show resilience after a largely successful first quarter of 2012, according to property advisers DTZ.

During Q1 2012 office lettings in Cardiff’s city centre reached 56,000 sq ft – a slight increase on the previous quarter.

Alex Easton, associate director of DTZ in Cardiff, said: "Despite a difficult market, Cardiff city centre take-up was again resilient in Q1, reaching 56,000 sq ft and although enquiries have remained patchy, there is good underlying demand for grade A space.

"Prime headline rents also broke through the £21 per sq ft barrier in Q1, albeit for a sub 3,000 sq ft suite at 3 Assembly Square in Cardiff Bay.

"It is however, an indication that there will be continuing pressure on prime headline rents to rise, although throughout 2012 we are likely to see a reduction in the amount of concessions that landlords are prepared to make."

There is concern about the development pipeline of new commercial property across Cardiff, with DTZ believing it to be “sparse” with the potential for polarising the market.

There are however exceptions across the country where annual take-up for office space will be greater in 2012 than last year. Take-up is forecast to pick up in Manchester, while occupants in Edinburgh could be considering pre-lets or relocating early this year with a spate of leases due to expire between 2014 and 2016.

There has been a growing trend throughout the country of grade B deals, with the last quarter continuing to see a predominance of grade B as opposed to grade B. This is said to be due to the current phase of the leasing cycle and existing occupier priorities, combined with the increasingly limited availability of grade A space in attractive locations.

Martin Davis, head of UK research at DTZ, said: "Lease events, consolidation, cost saving and opportunism continue to be precursors to the majority of deals.

"While most deals were smaller than 5,000 sq ft in Q1, a number of larger transactions led to increased take-up in Edinburgh, Glasgow and Leeds.

"The growing prevalence of grade B transactions is being driven by an increasing number of opportunistic mid-sized professional firms interested in the value and flexibility of the highly specified grade B space available in most regional cities."
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