A raft of large deals propelled Cardiff leasing activity to almost 600,000 square feet in 2024, the highest total since 2019, albeit still 30% below the pre-pandemic five-year average.
Commercial real estate market analytics company CoStar said the increase in activity signalled a reversal in the Cardiff market’s fortunes after 2023, when occupier demand sank to record-low levels. Leasing volumes rose to almost 250,000 square feet in Q4 2024, the highest quarterly total since the beginning of 2019, and more than double the five-year average.
Lloyds’ pre-let of 110,000 square feet at John Street in Callaghan Square in December was Cardiff city centre’s biggest leasing deal for seven years and represents a return of financial sector demand to the city, said CoStar. In November, Aldermore Bank acquired 28,000 square feet at 2 Central Square, while Starling Bank took 14,500 square feet on the 14th floor at Brunel in May.
Patrick Scanlon, Senior Director of UK Market Analytics, CoStar Group, said:
“There are positive signs for leasing volumes moving into 2025 after Creditsafe, the specialist credit checking firm, acquired 50,000 square feet at Cardiff Gate Business Park in February. The move will represent a significant expansion for Creditsafe, which currently occupies 19,000 square feet at Caerphilly Business Park, on a lease expiring in May this year.”
Despite the strong take-up, vacancies in Cardiff have been rising steadily since the pandemic and reached 7.6% at the end of last year, their highest level since 2016, although comfortably below the UK average of almost 9%. However, the vacancy rate appears to have stabilised, and forecasts suggest it will level out from mid-2025.
The volume of space under construction in Cardiff is at its lowest level since 2014, at 210,000 square feet, around 50% below the same point last year, when construction exceeded 400,000 square feet. High borrowing and construction costs have limited construction starts over the last year, suggesting that levels will fall further in the short to medium term.
Patrick said:
“Over 80% of the space currently being built has already been committed, suggesting that occupiers looking for prime, new space over the coming years may struggle to identify options. This will concern large occupiers, who may be forced into off-plan pre-lets to satisfy their requirements.
“Earlier this month, the Senedd Commission, the corporate body for the Welsh parliament, launched its search for a new 120,000-square-foot base ahead of its lease expiry in 2032. While it has the option to refurbish its current Ty Hywel offices, any relocation would likely require a pre-commitment.”
