Demand from government related contracts, finance and hi-tech industries is fuelling the growth of the South West’s business parks, according to GVA Grimley’s bi-annual Business Parks Review: Autumn 2007.

Prime office rents for out-of-town space in the South West increased by 5.7 per cent over the last twelve months - the highest rental increase of all UK regions and twice the national average.

Ben O’Connor, regional head of office agency and development at GVA Grimley incorporating Osmond Tricks in Bristol said: “Rental growth continues to boost developer confidence and over the first half of 2007 the amount of space under construction out-of-town has risen considerably. Growth in other UK regions has not been as strong – Scotland for example has recorded zero rental growth over the same period, and the North West just 0.9 per cent.”

Larger organisations are favouring the M4/M5 interchange, although an increasing number of requirements are also considering Swindon and Gloucester for price comparison purposes. South of Bristol, small to medium sized organisations are seeing the benefits of being located in less congested locations such as Portishead, Clevedon and Weston-super-Mare.

To meet this demand, the amount of space under construction has risen to 34,500 sq m at the end of June 2007, compared to 17,500 sq m twelve months earlier. Schemes under construction included 15,000 sq m at Aztec West in Bristol, 4,300 sq m in the final phase at Bristol Business Park, and 4,000 sq m at Gloucester Business Park.

The South West still continues to record the lowest vacancy rate of all UK regions, even though the amount of space available increased to 42,000 sq m, pushing the vacancy rate up from 6.5 per cent to 7.8 per cent, yet still well below the 11.2 per cent recorded three years ago. Nationally availability has risen by 3 per cent over the last six months to 13.1 per cent, the highest level since GVA Grimley began monitoring the market in 1995. The North / South variation is still significant with vacancy rates varying from 19 per cent in the North East, 15.2 per cent in Scotland, and 11.8 per cent in the South East.

Prime office rents for out-of-town space in the region increased by 5.7 per cent during the last twelve months. Rents ended the first half of 2007 at £242psm in Bristol, £199psm in Swindon, £170psm in Cardiff, and £153psm in Plymouth.

“Thanks to a major  9,000 sq m pre-let to Atkins at Building 500, Aztec West in Bristol, total out-of-town take-up in the first half of 2007 at 25,700 sq m was almost double that of the previous six months, and 25 per cent higher than the six monthly average of 20,500 of the previous five years,” continues Ben O’Connor. “The majority of the remaining space let in the past six months has been at Windmill Hill in Swindon, Matford Business Park and Pynes Hill Business Park in Exeter.”

The strength of take-up in the South West supported the national increase of 17 per cent to 293,000 sq m, the highest level of take-up recorded by GVA Grimley and well above the six-monthly five-year average of 211,000 sq m.

Archive index | Front page