The Office Guide for Bristol

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The Office Guide: Bristol

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Foreword

We’ve always viewed the workplace as an asset, not an overhead. A space that should work hard by improving the productivity and profitability of your staff. If it’s only keeping the rain out, it’s a wasted opportunity. It’s because of this passion for workplace environments we’ve created this guide. Rather than showcase the interiors we’ve designed and delivered (although we have plenty of these, if you’re interested), this guide offers an objective view of the buildings and city that many businesses call home. It offers a closer look at Bristol’s economy and office market including the sought-after addresses and burgeoning districts; lease trends and occupier movements; the deals being done and what the future holds for the Bristol city region. We’ve had a constant presence in Bristol since 1994 and have seen Bristol’s fortunes change. There’s no denying there’s lots more to come.

Content The rise of Bristol as a supercity Page 3 A growing workforce Page 3 Bristol’s office market Page 5 Occupier take-up Page 6 Sought after offices Page 7 Occupier trends Page 8 Case studies Page 9 Booming business Page 11 Technological revolution Page 11 Commentary: A Supercity Page 11

Simon Campion Sarah-Jane Osborne Director Design director

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A star is born - the rise of Bristol as a super city The city of Bristol has changed beyond recognition in the past decade and is now recognised as a major centre of commerce not just in the South West, but also globally. Bristol’s strength lies in the diversity of its economy, which has helped it through present as well as past recessions. Last year the city was identified in a report by HSBC as one of ten super cities or regional powerhouses, which foster the right environment for growth pioneers to prosper. Bristol’s high-tech advanced manufacturing and academic skills development have been pinpointed as key reasons for the “transformation of Bristol into a hub for a new industrial revolution.” It’s not hard to see why Bristol is attracting both British and overseas investors. The city has become a vibrant, bustling, cosmopolitan European centre with a rich and varied cultural heritage, a stunning architectural inheritance and the most competitive and productive economy of any English city outside London. It is the top UK city for quality of life. Martin Booth, Partner and Head of Office Agency with real estate agency Knight Frank said: “The city has changed enormously...in the early 1990s Bristol was a run down place with no focus for retail, leisure or offices. Harbourside was derelict from the 1970s to the 1990s and before Cabots Circus opened in 2008, the retail offering was extremely poor. It’s now a genuinely thriving city, which is bringing in large amounts of business and great strides have been made with inward investment.”

Employment: A growing workforce With a population of around 1 million, expected to grow by over 100,000 by 2026, Bristol employers have the pick of a 600,000 workforce all within one hour’s travel of the city. Compared to any major English city outside London, Bristol has the highest proportion of skilled workers. In 2007, 43.5 per cent of Bristol’s resident working age population were qualified to degree level or above. Further education is something that Bristol does extremely well with two prestigious universities - University of Bristol and University of the West - and two colleges of further education City of Bristol College and South Gloucestershire and Stroud College. With Bristol’s economy remaining relatively resilient during the recession, the city is set to grow quickly and its contribution to the UK’s economic growth is demonstrated by the fact that outside London, Bristol produced the highest level of private sector employment growth in England between 1998-2008.

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Wests Wing One, Glass Wharf, Bristol

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Bristol’s office market It’s generally acknowledged that 2012 has been a tough year for the Bristol office market with less take-up than in 2011 both for the city centre and out of town. Smaller deals below 10,000 sq ft are prevalent and there has been a slowing down in demand for grade A space, as companies have downsized or opted for second hand space. Rents for Bristol City Centre have remained virtually unchanged at £27.50 per sq ft for the past three years, while in the out of town market the top rent has been stuck at £19.50 per sq ft since 2011. Offering potential occupiers the right tenant incentives has been a deciding factor in Bristol maintaining its strong level of rents. Tenants will now typically expect to negotiate a 36 months rent-free period on a ten-year lease or 15 months on five years. However, as availability of grade A space tightens in 2013, tenant incentives are expected to reduce. Although the 2012 figures for Bristol’s office investment market are lower than for 2011, there has been ongoing activity with several large deals taking place. PRUPIM has been particularly active with the £26Million purchase of the grade A Temple Circus office building and No 2 College Square, a 50,000 sq ft BREEAM Excellent rated building. However, the prospects for 2013 are looking far more positive with several large investment sales due to complete in early 2013.

“Currently, Bristol office occupiers are securing space, mainly of 5,000 sq ft, on flexible five year leases, which tend to feature long rent free periods. “In terms of headline rents, these have remained static as incentives have moved out, which in itself could mean the Bristol city centre market has performed better than other regional city centres, where in the main headline rents have fallen.” Peter White, head of agency at BNP Paribas Real Estate’s Bristol office.

Key districts

One of Bristol’s biggest inward investment initiatives is the Bristol Temple Quarter Enterprise Zone. This purpose built, centrally located business hub covering 70 hectare (173 acres) of land surrounding Bristol Temple Meads Railway Station is designed to attract investors and boost local growth. It is estimated that more than 250 businesses could be accommodated in the Enterprise Zone, leading to the creation of almost 17,000 new jobs. Temple Quarter already has a number of creative and technology companies in occupation, as well as financial and profes-sional services and civil service departments.

CAPTIONS: (L) Temple Back and (R) An artist’s impression of the Temple Quarter Enterprise Zone.

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Other key areas include: Finzel’s Reach, this £255 million development is Bristol’s newest city quarter. It includes Bridgewater House, a 110,000 sq ft office building. Harbourside, is one of Europe’s largest regeneration projects and is now a vibrant mixed-use city district overlooking Bristol’s historic Floating Harbour and noted as a centre of focus for the financial services sector. Redcliffe, is one of the nine neighbourhoods that make up Bristol City Centre. It is an island bounded by the loop of the Floating Harbour, Temple Way and Temple Gate. A sustainable neighbourhood of mixed use development. Clifton, is one of the most attractive districts in Bristol with stunning Georgian townhouses, shops, restaurants and a wonderful village atmosphere. The restricted square footage of the Georgian townhouses means they attract smaller, but more creative types of business, such as TV production companies and estate agents South/South East Bristol, is the subject of mixed use development, including the £45m South Bristol Community Hospital, the £21m Leisure Centre, serviced office sites, the City of Bristol Skills Academy and the Bottle Yard, a 300,000 sq ft film production facility.

Occupier take-up

The biggest office take up by far during 2012 has been from the business services sector, which accounts for 40 per cent of all floor space taken in 2012 (around 110,816 sq ft). Other sector activity is captured in the chart above. Top office deals in 2012 SDL Software took 2,032 sq ft in The

Pithay, All Saints Street (£13.50 per sq ft) Maxim Integrated took 11,100 sq ft at

Redcliff Quay, 120 Redcliff Street (£19.50 per sq ft)

Creston took 27,200 sq ft at the West Wing, One Glass Wharf, Temple Quay

dBs Music took 9,363 sq ft at Temple Studios, Lower Approach Road

Simmons & Simmons took 7,813 sq ft at Linear Park, 1 Temple Quay Central

Morgan Cole took 6,840 sq ft at 10 Victoria Street

Foot Anstey LLP took 5,950 sq ft at 100 Victoria Street

Business service sector

40%

Professional services

14%

Consumer & leisure

13%

Manufacturing, energy and

industry7%

Public sector

6%

Computers & hi-tech

13%

Banking & finance

7%

CAPTION: (Below) Redcliff Quay, home to Maxim Inte-grated and (Below Right) Whitefriars, one of Bristol’s land-mark buildings

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A Place To Call Home Sought After Offices: Based on factors such as rent, size, location and specification, the top offices in Bristol include:

Temple Back - This BREEAM Excellent building has open plan office space with full access raised floors and can be let on a floor by floor basis with consideration given to part-floor lettings from 5,000 sq ft (Jones Lang LaSalle) One Victoria, Bristol Bridge - A Bristol landmark with views across the Floating Harbour. The building is currently being comprehensively refurbished with completion due in late 2013 (Knight Frank) Bridgewater House, Finzels Reach - Bridgwater House provides Grade A office space in Finzels Reach, Central Bristol’s new city quarter (Knight Frank)

Out of Town Nicholson House, Stoke Gifford - well specified second hand space with flexible space and good proximity to rail and road transport links. Har-moni has recently signed a ten year sub-lease with the Audit Commission at £15 per sq ft for 7657 sq ft (GVA) Hillside Court, Chipping Sodbury - independent business consultancy Jelf has leased the whole of this extensively refurbished 24,350 sq ft property on a 15-year lease (Alder King)

City Centre West Wing, One Glass Wharf - a prestigious waterfront property, close to Bristol Temple Meads Station and in the newly designated Temple Quarter Enterprise Zone (Alder King) Whitefriars - one of Bristol city centre’s landmark buildings with modern office and ancillary accommodation over 11 storeys, owned by Topland a privately owned investment company, which has 58,500 sq ft of space available at £9 per sq ft with a capped service charge (Alder King) Southey and Aylward House - prominent retail, office and leisure property in central Bristol. The 0.42 acre site has planning permission for a 140,000 sq ft mixed use development (Alder King) Kings Orchard - impressive modern offices overlooking Bristol’s floating harbour and occupying a prominent position in Bristol’s Business District. Office space is available for around £21.50 sq ft (GVA) 2 College Square - Grade A offices, which were completed in 2012 and are located in Harbourside (Jones Lang LaSalle) Castlemead, Cabot Circus - the tallest building in Bristol with views of Castle Green Park, Castlemead offers easy access to Bristol’s transport networks. At £15 per sq ft for office space, this is one of the top second hand buildings (Jones Lang LaSalle) Redcliff Quay - Major high spec waterfront offices situated in Redcliffe Village in the heart of Bristol (Jones Lang LaSalle)

CAPTIONS (Top) Bridgwater House and (Bottom) 2 College Square

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Office occupier trends Due to the economy, occupiers in Bristol have become increasingly cautious and more demanding in their requirements. “Greater flexibility in leases is key to signing up new tenants with a move away from 15 or 25 year leases towards five or ten year leases,” said Ian Wills, Director National Offices, Jones Lang LaSalle. “This is for a number of reasons, including an increase in European and American tenants, who don’t have a culture for longer leases. Plus an increase in smaller and more transient businesses, who because of fast changing circumstances are unable or unwilling to commit to a certain size of office space, as they don’t know whether they will be larger, smaller, or even in existence.” Occupiers expect better quality, well connected, sustainable offices of a specification that would only be found in new, prime office buildings, which are in short supply, plus they are able to afford the higher rents associated with Grade A offices, which have become more affordable over the past decade, as costs have declined. For example, prime rents are the same or slightly lower than they were in 2007, which in terms of affordability means that there is a wider pool of potential tenants. As a result older, second hand offices are becoming redundant and there is a surplus of empty grade C offices.

Landlords and developers now face a choice of reconfiguring/ refurbishing these offices and repositioning them as prime assets rather than secondary or going for a change of use and converting older offices to alternative uses, such as residential, hotel or student accommodation. Reconfiguring secondary offices offers a quicker turnaround than a complete change of use and allows landlords to take advantage of the shortage of prime, new Grade A space by making buildings more appealing to occupiers demanding higher specifications. For example PRUPIM is reconfiguring and refurbishing One Victoria Street, increasing the building in size to 47,000 sq ft, which is due to be completed in autumn 2013. Property Developer Leon Fear, director of the Fear Group’s property portfolio said: “Last year in Bristol city centre there was approximately 1 million sq ft of unoccupied secondary office space due to many firms, such as Burges Salmon, relocating to Temple Quay from the city centre, leaving vast buildings empty. “Many of these remain unused and are await-ing change of use or new occupiers, but some have been converted to serviced office accom-modation such as Centre Gate to cater for new trends in occupier's requirements.”

CAPTIONS: (this page and next) inside the offices of BDO.

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Case Study: BDO BDO, part of the world’s fifth largest accountancy firm, moved from its premises in One Victoria Street to Bridgewater House, part of the new Finzels Reach office, residential and retail development in the spring of 2012. The move of 120 staff to the 8,750 sq ft Grade A of-fice marked the first letting at Finzels Reach. BDO used a lease expiry to explore how new of-fice space could accommodate its five year growth plan, significantly improve operating practices through flexible and open-plan working, and bring staff and service lines closer together.

BDO also wanted a new client suite to bring its client functions and seminars in-house. The most stand-out aspect of the new office relates to their progressive approach to hot-desking, achieved by investing in the IT infrastructure and the design needed to introduce and reinforce how the senior management want the business to function.

Graham Randall, partner at BDO’s Bristol office, said: “The new office is already delivering tangible benefits, not just in terms of fostering a more flexible, collaborative and open working relationship between our staff but also showing us as an established practice in what is a very competitive market.” Claremont Group Interiors provided the design, fit-out, furniture and audio-visual solutions.

Case Study: Simmons & Simmons Simmons & Simmons, one of the UK’s top 20 law firms, took 7,750 sq ft at Bristol’s One Linnear Park, adjacent to Temple Meads Railway Station at the start of 2012. The firm opened a Bristol office as part of its on-shoring strategy, allowing London cases to be managed from Bristol and dramatically reducing its overheads in the capital. This is a perfect example of the growth of the legal sector and job creation in the city. Claremont Group Interiors provided the fit-out.

CAPTIONS: (Top Left) Simmons & Simmons new office. (Immediately Above) The reception of the new BDO office and the staff kitchen which features striking imagery of the Clifton Suspension Bridge to create a sense of place.

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A meeting room in BDO’s client suite, Bristol

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COMMENTARY: A SUPERCITY

It’s been quite a few months for Bristol - earmarked as a super city of the future in HSBC’s Growing British Business Report, allocated more than £11m from the government’s £114m Urban Broadband Fund and recognised as a finalist in the European Green Capital awards. Bristol’s economy is pushing ahead, creating the right conditions for investment, jobs and real growth.

In particular, it’s the broadband which stands to have the most impact. The arrival of ultrafast broadband and an increase in WiFi across the city will change the way Bristol businesses work and attract new businesses into the fold.

It’s Bristol’s rich vein of creative media and digital businesses, which will really feel the value first, giving them the means to compete with world-class cities such as Singapore and Tokyo. Of course, it won’t be long until these changes impact every business prompting a closer look at how they can really benefit from superfast broadband.

Creating opportunities to expand into new markets, improving customer communications, bringing operating costs down and providing greater scope for flexible working – technology is at the heart of economic growth. Technology has been impacting on the way we design and use space for decades and for a business like ours it is the relationship between people, space and technology that occupies our working lives. It’s no great stretch of the imagination to accept that with the birth of a digital economy, comes profound changes to the way businesses use office space.

In the short term, the focus will be on the roll-out, but in the years that follow it will be on the legacy - the business success stories it’s enabled, the improvements to business processes and the new ways that businesses occupy and use space.

The HSBC Growing British Business Report calls Bristol the hub for the industrial revolution. It’s certainly true that Bristol is a hotbed for change. Not just in terms of appetite, but investment in infrastructure and opportunity too.

By Sarah-Jane Osborne, design director at Claremont Group Interiors, Bristol office

Booming business

Bristol’s success can be attributed to strengths in key sectors. Bristol is a centre of excellence for the legal profession, which continues to flourish with London practices opening offices in the city, because staff and accommodation cost less than in the capital. Regional law firms, too, find that if they want to increase their profile, they need a Bristol office. Due to the BBC’s presence in the city for many years, Clifton is packed with private TV production companies, adding to the already established roster of names such as Aardman and Tigress Productions. Aardman recently opened its RIBA award-winning £7.7M new HQ on Harbourside. Financial Services is the most established sector within the city and it continues to grow. Over 50 micro-electronic and digital design companies are now based in Bristol, including Hewlett-Packard’s national research laboratory.

Tech Revolution Bristol was one of the successful cities awarded a share of the Government’s Urban Broadband Fund in this year’s budget.

The funds will be used to implement high speed broadband, centred around a large, centrally-located area comprising Temple Quarter Enterprise Zone, Harbourside and the University.

This area includes 5,000 businesses, as well as many residents and visitors and will also prompt WiFi coverage to be extended across the city.

These developments will put Bristol at the forefront of a digital and green revolution and importantly will create new opportunities for Bristol businesses to compete and thrive. The council’s intention to become a world-class, inclusive and digital economy is well underway.

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