Positive signs in the 2017 Cardiff market despite uncertainty

Type News

Date 31/01/2017

Despite 2016 having been a year filled with political turmoil, the like of which was inconceivable twelve months ago, take-up statistics gathered show the South Wales property market experienced one of its most positive years for some time. Both the Industrial and Office markets showed strong sales and lettings figures on the back of the completion of a number of significant notable transactions across each market and, positively across the whole of the South Wales region.

The well-documented continuing growth of the Cardiff City Centre Grade A office market was supported by a number of large transactions - lettings to Motonovo and Hugh James included – which drove take-up figures to well above 600,000 sq ft for the year, someway above the average annual for the City Centre. Other notable deals included the acquisition of 55,000 sq ft in Brunel House by HMRC. These deals all signify the growing demand for offices in Cardiff, both for Grade A and lower graded space, resulting in a dip in supply for immediate space.

The office market across the other major centres in South Wales was perhaps unsurprisingly, less high profile in scale than that of the Capital City with transactions tending to be towards the lower end of the size scale. However, the freehold acquisition by ERS of their building at Crucible Park on Millstream Way where in excess of 450 staff are employed, commits them to Swansea and underpins the attraction the City can still offer to service sector based businesses. In Newport the market was quieter again with take-up statistics made up of smaller out-of-town office transactions, often relocations, and in the main centred around Junction 28 M4 offering occupiers links into Cardiff and east towards the Severn Bridge.

2016 also proved to be a strong year for the Industrial & Distribution sector with the whole of the M4 corridor experiencing strong demand levels again resulting in a lack in available accommodation – an issue compounded by the disconnect between value and build costs, resulting in active occupiers facing a real issue which hampers any expansion and growth plans. Notable deals completed across South Wales in 2016 included acquisitions by Amazon and Uniserve with the sale of the former Mabey Bridge facility at Newhouse Farm Industrial Estate in Chepstow – a particularly encouraging post BREXIT deal for South Wales with AluK relocation into larger premises to meet strong growth plans and providing further job creation. However the most notable announcement in the sector was clearly the commitment by Aston Martin to create 750 new jobs with their creation of a new facility at St Athan in the Vale of Glamorgan, a move which signals the ability of South Wales to attract large scale occupiers supporting the growth and sustainability of essential SME businesses across the region.

2017 is predictably widely anticipated to be an uncertain year for obvious reasons – the looming triggering of Article 50 sets in motion the withdrawal and will undoubtedly bring with it another period of uncertainty. However post the BREXIT vote, the market fared considerably healthier than predicted and transactions completed in both the Office and Industrial & Distribution sectors across South Wales show a robust and growing market where values have shifted significantly and where employment levels continue to rise with fewer out of full time work. With the continued pull that has brought in the likes of Aston Martin and growth of existing businesses like Motonovo and AluK across both sectors there will remain vast opportunity within uncertainty.

For more information, please contact Tom Merrifield at GVA on 0292 024 8917 or tom.merrifield@gva.co.uk