In 2015, developer demand in Cardiff has increased.

Cardiff is a city in demand, according to Knight Frank's 2015 Cardiff Office Market study, and it is attracting the interest of big occupiers, buyers, and developers.
In Cardiff, Knight Frank's managing partner "Legal & General's recent decision to commit to the Central Square scheme in Cardiff - the biggest investment in Wales to date with an estimated value of up to £400 million," says Matt Phillips, "has given another indication of Cardiff's increasing recognition as a UK business centre." Other investors will be encouraged to invest in the Welsh capital as a result of the scheme." Qatar For Sale - Property Hunter

"Vibrant, amenity-rich, and well-connected workplaces are the secret to Cardiff's continued advancement as a business venue," he added.
Local developers JR Smart and Rightacres, according to Matt Phillips, had perfectly timed their commitments to the two big city center speculative projects at 2 Capital Quarter and 1 Central Square.

He said, "Their risk has been rewarded." "Both buildings are expected to be completed in early 2016, with 60,000 sq ft of JR Smart's 2 Capital Quarter and - we believe - 120,000 sq ft of 1 Central Square already likely to be taken." This is excellent news for the city, but it does mean that before the next phases of construction are completed, we will likely face a shortage of new grade A housing. As a result, there is a window of opportunity for refurbishment over the next six to twelve months."
According to Knight Frank study, office take-up reached 303,002 sq ft at the end of the third quarter (Q3) of 2015, down 24% from the same period last year and largely constrained by the scarcity of Grade A stock, which dropped by 46% in 2014.

"However, new active requirements remain strong at 301,000 sq ft, which is 9% higher than the five-year average, implying that take-up could increase," he said.
In 2015, the largest deal was at 2 Capital Quarter, where Public Health Wales signed a lease for 51,652 square feet. The move will allow many existing offices to be consolidated into the city center.

Although Grade A availability increased by 7% in 2015 to 107,000 sq ft at the end of Q3, it was still 31% lower than the five-year average of 156,000 sq ft. Just 6,250 sq ft of Grade A space at Number 1 Capital Quarter and 21,851 sq ft of Grade A space at 2 Callaghan Square were available in the city centre.
The development pipeline, on the other hand, was robust, with 254,000 square feet currently under construction, which is 23% higher than the five-year average.
Tenant demand was expected to rise as new buildings entered the market, supporting rental development. Prime headline rents are expected to rise from £22.00 per sq ft in Q3 2015 to £23 by the end of the year and £24 by the end of next year, according to Knight Frank.

Investor demand for good quality regional stock continued to strengthen, according to Knight Frank, with yield compression for both prime and good secondary office investments due to a combination of relative value against the South East and a recovering occupational market.
Investor interest in regional opportunities grew significantly in 2015, resulting in increased activity in Cardiff, despite a shortage of prime stock limiting transactions. The year's investment volumes were £61 million as of Q3, which was in line with the five-year average.

"However, with the Legal & General acquisition of Central Square completing in Q4," says Matt Phillips, "complete investment in 2015 will hit the highest annual total for the city on record."
In 2015, prime yields increased by 15 basis points to 5.75 percent. While still above the market high of 5.00 percent, this was the lowest level since 2007. With investor interest expected to remain high and the occupational market expected to improve, Knight Frank expects prime yields to remain below 6% in 2016.
The dedication of Legal & General to the £400 million Central Square redevelopment programme, with the first phase of office construction scheduled to be completed in Q1 2016, and BBC Wales relocating to Central Square by 2019, was a key investment achievement in the year.
"The success of Central Square is the latest example of substantial progress on redevelopment projects around the city attracting the interest of major investors," said Matt Phillips. "This is in addition to AVIVA's ongoing investment in the Capital Waterside Project and the redevelopment of Callaghan Square. Furthermore, we anticipate high demand for both the No. 1 and No. 2 Capital Quarters when they hit the market in 2016."

He also mentioned the sale of Helmont House in June 2015, where the mixed-use building drew fierce bidding from UK pension funds and opportunity funds, as well as international buyers, for £34.6 million.

"To ensure that Cardiff attracts more inward investment and attracts occupiers from growth sectors, the city must offer the right mix of workplace choices, infrastructure, and amenity," Matt Phillips said. This will necessitate improved connectivity both inside and outside of the city. Following that, new modern commercial space will be created.
"At the city level, this entails applying place-making criteria. Development plans should not be seen as stand-alone projects, but rather as part of a larger plan to develop the area.
"Occupants don't think of real estate in isolation from its surroundings any longer." "The city and its immediate surroundings must be amenity-rich, culturally appealing, and well-connected to the rest of the city and beyond," he said.
"Also, new occupiers are on the lookout for talent." As a result, colleges will play an important role in the city's future. Too often, the 'home grown talent' nurtured in the region's top universities has left for better prospects elsewhere. Cardiff must do a better job of cultivating this valuable resource and ensuring that career pathways are in place to keep 'homegrown' talent in the region."
The civil authorities, with the help of modern development, will be preparing Cardiff for the next stage of its growth by resolving change barriers, transportation access, restrictive planning, and restricted employment opportunities.
"Cardiff is now increasingly known as a business location on the global stage," said Matt Phillips. Only by building on the solid foundations already in place will the city be able to continue to progress and attract the needed investment.

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