Demand for commercial property in the South West is set to rebound in the second half of 2015, according to Exeter agents Alder King.
(Original article by Noel Stevens at Alder King: Express and Echo 13.08.15)
The firm’s Market Monitor Update report reveals a drop in demand for commercial property over the first half of the year but predicts stronger take-up and rental increases for the region’s office and industrial sectors in the coming months.
After a record-breaking end to 2014, take-up of office and industrial space across the South West fell back slightly to 3.1 million sq ft in the first half of 2015, primarily due to a lack of availability.
However, with increasing office and industrial enquiries in Exeter and across Devon, Alder King is predicting a much stronger second half of the year and an improving future as speculative development returns.
Demand was affected by the lack of quality supply in many locations. In Exeter, the supply of office space has fallen to 119,000 sq ft, the city’s lowest level since 2007.
Alder King expects speculative office development to return to Exeter this year, as high levels of demand and the market reaction to speculative office schemes in larger centres such as Bristol give developers the confidence to deliver stock to the Exeter market.
The volume of industrial space in Exeter is now at its lowest level for over 10 years, standing at just 110,000 sq ft. There is, however, confidence in Exeter’s industrial market, with 15,000 sq ft of speculative office development coming forward at Skypark, the new business park near Exeter Airport.
Noel Stevens, partner at Alder King, said: “2015 is following the pattern of last year which saw a stronger performance in the second half of the year.
“Now that the political situation has stabilised, we are expecting Exeter and Plymouth, together with many of the key South West markets, to deliver a robust performance over the next six months with increased take-up.”
He added: “One of the key factors in the industrial market is the increasing demand from owner occupiers for freehold opportunities. This is driving further speculative development and the commissioning of bespoke premises in a number of centres.”
In Plymouth, demand for quality office stock has resulted in upward pressure on rents with both city centre and out of town rents now at £16 per sq ft. The city has just 157,000 sq ft of available office supply, its lowest level for over 10 years, and speculative development will soon get under way to meet demand.
The volume of supply in Plymouth’s industrial sector has also dropped dramatically. It peaked at 1.4 million sq ft in 2010 but the city now has only 156,000 sq ft of available space.
Alder King said its success in securing planning consent for 349,000 sq ft of mixed use development at South Yard, part of Devonport Docks, will help satisfy growing demand from the marine sector and secure high value jobs in the area.
The supply of offices across the South West peaked in mid-2012 at 5.7 million sq ft but has fallen by 49 per cent to 2.9 million at the 2015 half year point. After peaking in 2009 at 9.98 million sq ft, industrial supply has also dropped year on year to 4.1 million sq ft at the 2015 half year point.
Alder King Market Monitor Update provides an overview of the commercial property market over the first half of the year in Bristol, Bath, Bridgwater, Cardiff, Exeter, Gloucester, Plymouth, Swindon, Taunton and Truro. It also includes reports on the region’s retail, investment and residential land markets.