The Met Office’s £100m supercomputer is set to shake up the Exeter office market as businesses look to relocate their operations to the region, according to leading property consultancy JLL.
Demand for space at the Exeter Science Park, adjoining Exeter Gateway and nearby Skypark is expected to soar as business owners seek to benefit from opportunities to collaborate and form partnerships with the Met Office.
These predictions, revealed today (February 4) at JLL’s South West Market Review, themed ‘smart future,’ come after a slow year for the Exeter office market, where there have been low levels of take-up across the region despite increased business confidence.
Tim Western, director in JLL’s Exeter office, said: “2014 was a challenging year for the office market with a serious lack of good quality second-hand and Grade A office space, despite an overall rise in business confidence.
“Exeter has had a good recession, the economy is hungry for growth and the arrival of the supercomputer will generate further demand, raising the profile of the city nationally and internationally.
“The effect on the local and regional property economy will be enormous, with the main beneficiaries of the investment being the remainder of Exeter Science Park, adjoining Exeter Gateway and nearby Skypark. We predict new bespoke development at these sites to meet occupier demand.”
JLL also predicts that deals will be signed at key development sites in Somerset and Devon this year, with Cornwall following suit in 2016 as the next stage of the ERDF (European Regional Development Funding) Convergence programme comes through.
Western continued: “Work is something you do, not go to, and businesses are now seeking next-generation offices to house their operations in order to create the best working environment for employees. We live in an age of mobile mentality and our workspace now needs to maximise the use of technology to reflect that.
“We are leading the way in workplace transformation with our upcoming move to The Senate. This modern, Grade A space provides a new dynamic and collaborative workspace for the team in Exeter.”
Turning to the industrial sphere, JLL says the logistics sector is powering ahead with many new-build transactions. These are underway to meet the demand for more sites in regional locations in order to manage the growth of the online retail market and parcel distribution networks.
According to the Industrial Agents Society, total take-up in the South West’s industrial sector was 2.62 million sq ft in 2014, up 17 per cent year-on-year, with total transactions up 19 per cent.
Key deals included GeoPost DPD which will move into its new 60,000 sq ft purpose-built shed at Skypark in late summer, while STILL Materials Handling has agreed terms for a new 72,500 sq ft UK headquarters at Hill Barton Business Park in a transaction brokered by JLL.
Western continued: “The main theme in 2014 was further-tightening of the supply of second-hand stock, so going forward we can anticipate further growth in new-build, bespoke units to meet increasing demand. However, it will be interesting to see how new technology continues to impact the built environment and the way in which occupiers need or use industrial property.
“Currently demand is being driven by the online retail market, but with the likes of Amazon Prime Air set to become a reality in the US by the end of this year, the question is, what’s next?
“Amazon’s delivery drones can carry packages weighing up to 5Ib and these make up more than 85 per cent of its deliveries. If this technology becomes viable on a large scale, then property requirements in the logistics sector may well be affected, with a need for a large number of hyper-local, smaller logistics sites likely to emerge.”
Across both the offices and industrial space, there is a real prospect of rental growth in 2015, says JLL.
Western said: “Against a backdrop of decreasing supply, greater economic stability and business confidence, the requirement for shorter leases, the ‘Hinkley effect’ and the increased cost of constructing new buildings have to equal upward pressure in rents.”
In 2015, JLL’s Exeter team will celebrate 25 years of working in the city. The property firm, which has had a presence in the city since 1990, has agreed to take 4,500 sq ft of Grade A space on the ground floor of The Senate to accommodate its growing team.
The first phase of the Met Office’s supercomputer will be operational in September 2016 and the system will reach full capacity in 2017.
