The Bath office market “remains challenging”, according to new research, with occupiers unsure of what space they will need as staff continue to work from home.
At the same time, the city's lack of available housing is making it more difficult for employers to recruit and retain employees.
The downbeat picture emerges from a new report by national property agents Carter Jonas and is marked contrast to research by the same firm last year which showed that the city rebounded from the impact of the Covid pandemic quicker than most other towns and cities in the South West.
Activity soared by nearly two-thirds between the second and third quarters of 2022, with just under 23,000 sq ft of office space leased in the third quarter alone – some 63% up on the quarter and an increase of 56% year on year.
This was partly driven by the first lettings at No. 1 Bath Quays, pictured above, the city’s first major office development in a generation.
However, in the whole of 2023 so far just 35,000 sq ft of space has been transacted in central Bath.
Since then the market has slowed markedly, according to Carter Jonas, with a 14% fall in quarter-on-quarter activity.
In the latest edition of Commercial Edge, its regular commercial property market update, the firm – which has had a presence in Bath since 2009 – says: “[Bath office] inquiries remain subdued, as most occupiers are unsure of their space requirements and continue to seek higher-quality space to entice employees back to the office.
“Decisions are slow, and many transactions are taking longer to close. Fundamentally, the city's lack of available housing is making it more difficult for employers to recruit and retain employees, who are reluctant to commute long distances.”
The report says take-up across the six cities covered by the report was 8% up quarter on quarter but 6% down year on year. It was also 20% below the five-year quarterly average.
While the central Bristol market also reported “sluggish” take-up in the third quarter of this year, the report says the city, unlike Bath, enjoys a “healthy pent-up demand which should see improved take-up in Q4 2023 and in 2024”.
Carter Jonas also said some lower-quality office space in central Bath was starting to be converted to residential use, which should help to improve the overall quality of the office stock.
It added: “Hopefully, over time, we will see a better balance between residential and office space in the market, resulting in fewer, but higher-quality, offices.”
Last month Bath Business News revealed that city-based L&C Mortgages, the UK’s largest fee-free broker, plans to move its head office into the city’s recently opened Newark Works development, pictured above, in a major success for the Bath Quays regeneration area.
The once-derelict industrial site – originally the home of global cranemaker Stothert & Pitt – has been transformed by developer and regeneration specialist TCN into modern workspace.
L&C, which plans to occupy 4,864 sq ft in Newark Works, joins ReadyGo Diagnostics and Monahans Financial Services, which took 3,000 sq ft and 2,300 sq ft respectively in the building earlier this year.
With financial services consultancy and software provider Equisoft (formerly Altus), and chartered financial planning group Fidelius relocating to the neighbouring No.1 Bath Quays office scheme, the area is emerging strongly as a major new business hub for the city.
Take-up in Bath was also boosted earlier this year by another refurbishment, with new-look Trimbridge House, pictured above, on Trim St attracting established cloud communications telecoms provider Gradwell Communications and fast-growing sustainable drinks business Canned Wine Co.
They joined existing Trimbridge House occupier, FinTech firm M&G Wealth Platform, formerly Ascentric.
