Investment in Bath’s commercial property market is continuing to grow strongly but businesses are increasingly being hit by the ongoing severe shortage of new office space, according to new research.
Regional property agents Alder King’s influential annual Market Monitor shows Bath’s commercial property sector outperformed many other towns and cities across the South West and Wales last year. 
But it also highlights the continued challenges for the city, particularly its lack of new Grade A offices as well as its long-running shortage of industrial space.
Both these had led to firms moving out of the city, primarily to Bristol where the right kind of accommodation is available for office-based and industrial firms.
The report also points out that Keynsham’s new Chocolate Factory development – on the site of the former Cadbury’s plant – had also attracted expanding businesses away from Bath.
However, this scheme was likely to be fully let soon, adding to the city’s problems as no major office developments are due to come on stream in the short term.
Bath’s retail property market, despite being hit by problems that are impacting on high streets across the country, fared much better last year than most other cities, with a below-average percentage of vacant shops.
The report says notable office transactions last year included the letting of 18,000 sq ft at Northgate House to serviced office provider Space (part of Regus) and 13,000 sq ft at Cambridge House to Clarendon Business Centres, also for serviced offices
Three lettings were secured at The Chocolate Factory totalling around 55,000 sq ft before the office part of the scheme was even finished.
The most active sectors continued to be TMT (technology, media and telecoms), professional services and serviced office operators, it said.
The severely restrictions on the supply of modern, flexible city centre accommodation were illustrated by the fact that lettings at 20 Manvers Street and Royal Mead, pictured above – the only two large buildings in that market – were in solicitors’ hands, said the report.
Potential new build developments with consent are planned but not yet under construction at Roseberry Place, Strata and Bath Quays South.
Bath & North East Somerset (B&NES) Council had shortlisted potential development partners for the “highly significant” employment-led Bath Quays North development.
The lack of quality office space meant several of the new proposed Grade A schemes were guiding quoting rents above the £31 per sq ft achieved at 20 Manvers Street.
The Market Monitor shows there was what it calls “a reasonable level” of new retail lettings in the city centre throughout 2017, with new arrivals including MAC, COS, Neptune and Bravissimo. However, prime Zone A rents were unchanged at £205 per sq ft.
“The number of empty shops remains well below the national average but secondary pitches have seen an increase in voids,” said the report.
The long-awaited Mero Retail Park on Lower Bristol Road opened during the first quarter of last year with occupiers Pets at Home, Carpetright and Costa. They have since been joined by Hobbycraft.
“In a city where land supply is constrained, Mero is the first out of centre non-food development for several years,” the report points out.
The leisure and A3 (food and drink) market remained very active with new restaurants including the Ivy Grill on Milsom Street, Giggling Squid, Smash Burger and Tapas Revolution.
Swoon Gelato opened its second store in Kingsmead Square and Anytime Fitness opened on Henry Street.
Investment transactions soared by 426% to £107.3m, mainly as the result of Legal & General’s £47.5m forward funding of the first phase of Roseberry Place, a mixed-use, three-acre riverside scheme in Bath’s Enterprise Zone that will provide around 170 apartments, a food store and around 50,000 sq ft of office space. The scheme is anticipated to complete in 2018/2019.
The largest office transaction was CBRE Global Investors’ purchase of Royal Mead, near the railway station, for £8.61m.
