Preventing the further conversion of office buildings to residential use will energise Exeter’s city centre and promote job growth, according to national commercial property consultancy Lambert Smith Hampton (LSH).
LSH’s annual South West Office Market Report, which provides investors, developers and occupiers with detailed insight into Exeter’s supply, demand and development of office space, said the city was ‘starved’ of quality office buildings.
“Despite excellent road links, a prestigious university and mix of high quality occupiers, Exeter has arguably yet to fulfil its potential as a first-class regional office market,” commented Peter Musgrove, Head of Office Agency South West at LSH.
“Although development is taking place, the market is severely short of ready built supply.”
While take-up in the first half of 2017 has been steady at 80,000 sq ft, the report pointed out that activity at the larger end of the market had been held back by a lack of options, with just a handful of buildings in Exeter capable of accommodating occupiers needing more than 10,000 sq ft.
Neither the city centre or out of town currently has any grade A office space available, the report stated.
Looking towards current supply and development prospects, LSH’s report showed that Exeter’s out of town market is faring better than its city centre counterpart, with more choice for businesses looking to expand or relocate.
Larger out of town examples include Pynes Hill House (33,000 sq ft) while the only sizeable option in the city centre is Broadwalk House, Southernhay (30,000 sq ft).
On developments in the pipeline, the report highlights St Modwen’s speculative 17,142 sq ft at Skypark, scheduled for completion by the end of 2017, and “Grow-On” buildings 1 and 2 under construction at Exeter Science Park, totalling 14,000 sq ft and 10,000 sq ft respectively.
Commenting, Peter said: “The out of town market will continue to attract the lion’s share of demand and there is a risk that this will take place at the detriment of the city centre, a situation which the council can address by taking action to restrict more commercial stock being redeveloped for residential.”
“We think the city centre would benefit from positive intervention to protect and enhance employment,” he added. “The council, for instance, could play a decisive role in re-energising the city centre as a focus of employment.
“It could do this in a number of ways; for example, protecting existing office developments by preventing permitted development extensions or even allocating some of its own sites for employment use.”
Headline rents in Exeter started the year at around £18.50 per sq ft, but with the delivery of new office space, this could exceed £19.50 per sq ft by the end of 2018, the report said.
