Investment in Bath’s commercial property market reached almost £150m in 2015, with a significant number of transactions completing within the year, including three deals of over £20m, according to the latest research from Carter Jonas, the UK property consultancy.
Activity focused on retail, leisure and student accommodation, as Bath continues to benefit from significant occupier demand from these markets. TIAA Henderson’s acquisition of Milsom Place, the restaurant and retail development in the centre of the city, was the largest deal last year, at £26.1m. M&G’s acquisition of Arlington House, another retail led scheme, was the second largest deal, at £25.7m.
Mike McElhinney, Partner in Bath Commercial Agency, Carter Jonas, reported on the latest findings at the breakfast launch of the firm’s Retail Edge and Commercial Edge research reports at Bath Function Rooms, Green Park Station. He said: “Bath saw a steady demand from new incoming retailers over the course of last year, as well as a number of relocations within the city centre. Given this demand, it is little wonder that investment activity was so strong, with increasing interest from institutional investors.
“Bath’s historic reputation as an internationally renowned tourist destination is now complemented by its relatively new status as a destination of choice for education, with increasing numbers of foreign students coming to the city. This development has only served to enhance Bath’s appeal, to occupiers and investors.”
Many big brands leased space in 2015, including a number of restaurants such as Burger & Lobster at Milsom Place, and The Stable at Westgate Buildings. Retailers such as OKA, and Santoro, taking space on Milsom Street, helped to strengthen the area’s high-end lifestyle offering.
Mr McElhinney, continued: “In the retail sector there is an imbalance of demand for space and suitable units in the city. This lack of availability will likely cause further rental growth over this year, and could lead to incoming retailers having to pay hefty premiums to secure space over existing occupiers. In particular, Milsom Street and New Bond Street are expected to see an uplift in rents, as occupiers compete to secure space in these highly sought after locations.”
Take-up in Bath’s office sector totalled 88,082 sq. ft. in 2015, only a fraction higher than the 87,850 sq. ft. of space recorded in 2014. The absence of new development and Grade A space in the city, contributed to the relatively subdued take-up figures.
Philip Marshall, commercial partner and head of the Carter Jonas Bath office, said: “The lack of new development is hindering activity. In recent years, permitted development rights and local planning policies have reduced available space in the market, while sites which might previously have been used for the development of office space, have been used for residential schemes. This has resulted in an office supply shortage. Bath has been identified as one of the top ten creative clusters in the country and we need to ensure that we can further support and accommodate these businesses. It is therefore vital that the city can offer suitable space which encourages collaboration and is capable of adapting to business growth.
“Office availability currently stands at 87,690 sq. ft., a 2.9% decrease on 2014, and no new office stock came to the market in 2015. If not urgently addressed, the city will find itself losing out to nearby markets, as it is unable to accommodate businesses looking to either expand or move into the area. However, the delivery of 45,000 sq. ft. of Grade A space at 20 Manvers Street towards the end of the year should start to relieve supply constraints.”
Other development activity anticipated in 2016 is BMT Group’s proposed redevelopment of Bath Quays South. A detailed planning consent application is expected in the autumn with the aim of creating 40,000 sq. ft. of creative workspace in addition to its own 45,000 sq. ft. accommodation. Also progressing is Ediston’s 113,000 sq. ft. scheme, which has recently received planning consent. An additional 16,000 sq. ft. of business space is set for delivery by Spenhill, on the former Bath Press site, and nearby, Deeley Freed, has a consented 45,000 sq. ft. of space, with both schemes being underpinned by significant residential development.
Pictured above from left to right: Philip Marshall, Mike McElhinney and Darren Yates, head of research at Carter Jonas, presented their findings to an audience of local business men and women at the Bath Function Rooms