Bath risks losing more firms to Bristol unless new prime office developments in the city come onto the market quickly, property experts fear.
A severe lack of quality employment space has already led to a number of Bath firms relocating along the A4.
Yet no new office schemes – particularly those aimed at businesses in the city’s vibrant tech and creative sectors – are scheduled to be developed until later this year. 
And while Bath & North East Somerset Council has ambitious plans to include innovation and creative space in the Quays South development off Lower Bristol Road, this was still several years away.
JLL director John Mulholland said the extension of the Government’s Permitted Development Rights scheme encouraging the conversion of office buildings for residential use was making the situation worse in Bath.
Add to the mix the fact that developers could get higher returns by converting office buildings to hotels or student accommodation than by letting them to businesses, and it was reaching crisis point, he told JLL’s annual property review in Bath yesterday.
JLL estimates that an average 60,000 sq ft office building in Bath has a value of £6m to £7m when let to businesses but £7m to £8m when converted to apartments. However, turning it into student accommodation or a hotel increases its value to between £9m and £10m.
The supply of prime space in Bath has now reached a five-year low and in 2015 the largest office letting in the city was 9,500 sq ft with the average just 1,600 sq ft – proof, said Mr Muholland, that businesses were unable to move within the city.
Fast-growing firms such as online investment platform developer Parmenion and specialist software engineers Purple Secure Systems had relocated to Bristol after failing to find new premises in Bath – and more could follow, said Mr Mulholland.
“It’s a constant threat,” he said. “We need more space now, especially in the technology and media sectors where there is virtually nothing in Bath that’s suitable for those kinds of businesses who want something a bit quirky.
“There clearly is pent-up demand but developers need to know that they will be able to get higher rents on refurbished offices rather than turning them into more apartments.”
One building that is being marketed for office use is 20 Manvers Street – a six-story 1970s office block that is now being upgraded by owners West Midland Pension Fund. The 45,000 sq ft of prime space should be ready in the autumn with a new record rent for Bath of £24 per sq ft.
A further 113,000 sq ft of grade A office is planned by developer Edinburgh-based Ediston Real Estate at its 1 Pinesgate scheme on Lower Bristol Road.
Mr Mulholland’s views are echoed by property agents Alder King. Its annual market monitor highlights the lack of office space in Bath.
Partner Simon Price said the supply of flexible, modern office space had been “severely restricted” by the lack of supply and the conversion to alternative uses.
He added: “ A number of large inquiries are active in the market from existing Bath occupiers considering expanding or upgrading their space but these are currently being frustrated by the lack of appropriate stock.”
