Cardiff 2021 Forecast Cardiff

2021 Forecast

The 120,000 sq ft Interchange development at Central Square is also likely to come online during the year although that is fully let to Legal & General. In addition, we expect to see work start on the 220,000 sq ft Ledger Building as part of the Trend watch mixed-use Central Quay development, which in total will see 1.5 million sq ft delivered, including the redevelopment of the Deglobalization 2.0 listed Brewhouse building. With companies de-risking operations, While investment has unsurprisingly slowed during 2020, we Cardiff could benefit from increased continue to see appetite, with values holding up relatively well. onshoring of operations such as call centres. Cardiff City Council’s acquisition of the Red Dragon Centre in Cardiff Bay, the largest deal done during 2020, will enable the Building a recovery development of an indoor arena and mixed-use complex on Improvements to infrastructure including the site of county hall. This development will be supported by the South Wales metro extension is enabling improved connectivity as a result of the South Wales metro wider scale property development both in extension, which is similarly enabling large scale residential the city centre and surrounding areas. development in the wider city area. Despite lacking its own supply of large-scale warehousing, which has seen such strong demand in the rest of the UK, the Cardiff industrial market continues to show strength, which is replicated While Cardiff has recently seen improvements to its food and Executive Summary across Wales. Continued strong demand, with medical occupiers beverage offering with a number of operators opening as well as particularly active, combined with a low level of supply continues street food concepts popping up such as Corporation Yard and to underpin rental and capital values. the Goods Shed in Barry, we are likely to see some businesses – Following recent years of strong letting activity Covid-19 has unsurprisingly had a significant impact on close during 2021, which will negatively impact the city. On the in the office market from both the private the youngest capital city in Europe. The Welsh firebreak Cardiff’s success as a city owes much to its status as a retail retail side, we continue to see the vacancy rate increase. This is and public sector, 2020 was unsurprisingly and the city’s emergence from tight restrictions, as and events destination. The hospitality sector has clearly seen creating opportunities for repurposing and development in the subdued. much of the UK was going into a second lockdown, put challenges during 2020 and will continue to do so while we await city centre – with the Howells department store being marketed the return of large-scale events to the city. as a redevelopment opportunity. – We do not expect to see too many new Cardiff at the forefront of the UK’s economic recovery entrants into the market during 2021 and and highlighted the desire of the city’s residents to get

there is already evidence of a number of back to some semblance of normality. Cardiff City Council’s acquisition of the Red Dragon Centre in Cardiff Bay will enable the occupiers downsizing their requirements. Following recent years of strong letting activity in the office market development of an indoor arena and mixed-use complex on the site of county hall. from both the private and public sector, 2020 was unsurprisingly – Continued strong demand in the industrial subdued, with Cardiff not seeing the large deals that had become market combined with a low level of supply commonplace over the last five years. continues to underpin rental and capital UK Cities Recovery Index | Sector Indices Cardiff values. There continue to be requirements in the market, with HM Courts Avant by Avison Young Cardiﬀ City Index Commercial Activity Hotel & Leisure Mobility Residential Retail Return To Oﬃce Service looking to consolidate their footprint in the city and a – The hospitality sector has clearly seen number of professional services businesses actively looking for challenges during 2020 and will continue to space. However, we do not expect to see too many new entrants 140 do so while we await the return of large-scale into the market during 2021 and there is already evidence of a events to the city. number of occupiers downsizing their requirements. Furthermore, 120 – Increasing city vacancy is creating while there is relatively little evidence so far, we are already seeing 100 opportunities for repurposing and a number of occupiers putting ‘grey’ space onto the market. We development in the city centre – with the expect to see this continue during the year – although to what 80 Howells department store being marketed as extent remains to be seen and we do not expect this to have a a redevelopment opportunity. significant effect on rental levels. 60 Whilst the city has seen a significant amount of development over the last number of years, there is currently a lack of readily 40 available grade A office supply. However, this is likely to change in the short-term with 2021 due to see the 109,000 sq ft John Street 20

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Peter Constantine Managing Director, Cardiff [email protected] +44 (0)292 024 8932

Daryl Perry Director, Head of UK Research [email protected] +44 (0)20 7911 2340

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