11 Nov 22 by Zach Maiden



Industrial sector

The past 5 years has seen significant growth in this sector (exasperated over the last 2 years as the Pandemic hit the retail market) with record rents being achieved from warehousing to workshop space. The current market has however taken a slight stall due to uncertain market conditions and the well documented cost of living crisis.  

However, there is still demand although requirements are quite specific and on a case-by-case basis as these record rents are now being carefully considered. The good news is that there is still a clear lack of supply of good quality industrial stock in Devon. There are more sites coming out of the ground at Oaktree Place Business Park (Kingskerswell), Phase 2 Skypark (Exeter) and Phase 2 Mercury Business Park (near Cullompton) with other schemes in Wellington and Barnstable currently in planning.  

This rise in stock doesn’t seem to be reducing supply however as most of these schemes are being sold off plan mainly to owner occupiers (but some investors) which suggest real world use of the premises from completion. We remain cautiously optimistic in the industrial sector and will be monitoring this market over the coming months. 

Office sector

The office market continues to struggle with lack of take up although there is still a lack of supply of good quality stock in Exeter. Rents are under pressure but we would argue that a lack of good quality and particularly unique Grade A-B accommodation does not provide the opportunity to push rent to compete with Bristol, Bath and Cheltenham markets. This is the type of space that is likely to attract the best talent to the region but without a rise in rents per sq ft it is not cost effective for landlords to refurbish and reconfigure their property.  

Our issue in Exeter is simply down to a lack of quality accommodation in town and occupiers are being pushed to locations such as Winslade Park (out of town) which is effectively hurting the city center’s retail and leisure (evening and night life) markets. Requirements are still down and are expected to remain in short supply as we approach the holiday period.  

However serviced offices remain popular due to flexibility and collaborative working which traditional landlords are reluctant to offer due to low passing rents with stagnant and limited growth. We expect this market to continue to struggle over the coming quarter with no new unique accommodation coming to the market.  

Retail sector

The retail market has remained relatively consistent despite a poor economic outlook having survived the COVID-19 Pandemic and benefitted from the rise of the opportunist independent sector. We haven’t noticed a particular downturn and in fact deals are still being transacted although at a significant reduction in agreed rent from rents at 2019 levels (although now at a realistic and sustainable rebased rental).  

Affordable retail in prominent positions is still relatively strong and so long as the Market Rent is offered there are takers for well positioned units in affluent towns in the region. Consumer experience is still key and the ‘E’ use that came into force in September 2020 has resulted in a diversifying High Street which is driving the consumer a positive ‘quasi-retail’ experience.  

Long gone are the days of stagnant retailers offering poor quality branded clothing and up has risen the independent occupiers offering good value for money and ethically sourced products which consumers would rather buy in-store. 

We expect this trend to continue and see retail as an opportunity in the future as the market readjusts to the new market norm. 

 

To talk to our commercial agency team in Exeter, please contact Zach Maiden