King Sturge - General - Exeter,

Date: 31 Mar 2010

Exeter office market will improve.

The opening up of Skypark and Exeter Science Park with road and services infrastructure will pump prime the next phase of the city's economic growth, according to property consultants King Sturge. Both sites will get planning consent this month.

The firm says that whilst demand for office space in Exeter will continue to be slow throughout 2010 the supply of top quality Grade A stock is diminishing.

According to King Sturge's latest Office Markets Report, the situation will improve due mainly to the ongoing development pipeline based to the east of the city at Exeter Business Park and the other side of Junction 29 of the M5.

The report says that office take-up in Exeter fell from 130,000 sq ft in 2008 to around 100,000 sq ft in 2009. More stock became available during the year despite a halt in speculative development due to more second-hand space coming on to the market. This was heightened in mid-2009 by the release of over 40,000 sq ft at Pynes Hill in Milford House.

Meanwhile King Sturge says that rents - currently at £16.50 per sq ft out-of-town and £18 per sq ft in the city centre - are expected to remain static this year for existing stock. For new build, rents will need to rise to make development economically viable.

Andrew Pearce, partner in the office agency team at King Sturge in Exeter, commented that while the office market remained subdued there have been two landmark developments to boost the market. The first is the new Flybe Training Academy at the airport which is now on site, and the second is a 40,000 sq ft state-of-the-art building at Exeter Business Park, called Oxygen House which is being developed by Summerfield Developments for the statistical research consultancy, ATASS. This is scheduled to start next month.

"Grade A office supply is limited in Exeter and this is gradually being taken up with recent lettings in the Senate to Reuters and Trowers and Hamlins," said Mr Pearce.

"Over the medium and longer term as the economy improves, there are at least sites in the development pipeline to meet demand. These include the remaining four acres at Exeter Business Park, Skypark at the Airport (100 acres) and Exeter Science Park (70 acres) adjacent to Junction 29 of the M5."

Last year, Devon County Council signed a partnership agreement at Skypark with St. Modwen, to progress work on designs for a mixed-use development of 1.4 million sq ft of office and manufacturing space, ancillary retail and a hotel. The first phase will consist of two office blocks totalling 50,000 sq ft, which it is hoped will be ready for occupation in 2012.

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