Our commercial agents have summarised the commercial property market in the South West looking at industrial, retail and office sectors, following on from our in person events.
Industrial Property Market Update
The industrial property market across the South West continues to evolve, with key trends emerging in Cornwall, Plymouth, and Exeter. Despite economic uncertainty, demand remains strong, but challenges such as rising costs and supply constraints are shaping the landscape.
Industrial Property in Cornwall
The freehold market in Cornwall has remained steady over the past year, with sales continuing into 2025. A persistent lack of supply means that when well-located and suitably sized commercial premises become available, buyers must act quickly. Most transactions have involved owner-occupiers, reflecting the continued growth of Cornish businesses. Recent notable sales include Agar House and Unit 9 Kernick.
However, there has been a shift in financing trends, with more buyers relying on bank funding, leading to longer transaction times.
The industrial letting market, while slower compared to the post-lockdown surge, remains active. Recent lettings include Unit 5 Hayle Marine, 9 & 9a Threemilestone, and 36 Normandy Way.
Rental values vary depending on property specifications:
- New-build industrial units: Circa £14 per sq ft
- Older stock: Between £8 and £13 per sq ft
The highest levels of activity are seen in units between 1,000 and 2,000 sq ft, though smaller “starter units” under 1,000 sq ft are also proving popular.
Industrial Property in Plymouth
In Plymouth, demand for leasehold units remains strong, particularly for smaller (under 1,500 sq ft) and larger (10,000+ sq ft) spaces. Rents have now stabilised following a period of continued growth.
Rental values again vary depending on property specifications, but generally range from £8 – £10 per sq ft.
Interestingly, the differential rate per sq ft achievable between small and large units has diminished, likely due to an overall lack of supply across the board. If the lack of supply continues then this may be a trend that is here to stay. Business rates increases have also created a two-tier market, with properties just over the small business rates relief threshold experiencing rental pressure.
New-build developments face headwinds due to high construction and financing costs. Speculative development has slowed, and the only units consistently being delivered are hybrid warehouse-office spaces. These appeal to construction businesses but do not address the broader supply shortage.
Recent sales vary depending on property specifications but generally range from £50 to £125 per sq ft.
Industrial Property in Exeter
Exeter continues to see high demand for industrial space, with rental values holding firm. The supply shortage in Exeter is benefiting regional towns like Okehampton, Crediton, Barnstaple and Cullompton where businesses are seeking alternative locations.
Looking ahead, more stock is expected to come to the market, which may impact values. However, freehold properties remain desirable for investors and occupiers, particularly for investors who can integrate them into pension portfolios.
Environmental, Social, and Governance (ESG) concerns and EPC ratings are influencing occupier decisions, with a growing focus on energy efficiency and maintenance costs. Larger logistics and e-commerce companies are actively seeking 30,000 to 40,000 sq ft units, but availability remains scarce.
Despite valuation challenges, well-located, high-spec units continue to command premium prices and are often snapped up quickly.
We’re seeing a diversification of traditional industrial parks, with mixed use becoming common. A major planning application has just gone in for the fringe of Marsh Barton which will see 20,000 new homes and a variety of leisure and healthcare premises coming onto the market over the next ten years or so.
- 41 Abbey Road, Plympton. 4 units – quality tenants. Sold – £1.475 million with a yield of 6.84% NIY
- Hennock Road, Marsh Barton, Exeter. Let to Kingfisher Internation Ltd (B&Q). Available for £1.35mil at 6.17% NIY
- The Agronomy Centre, Willand. Let to Masstock Arable (UK) Ltd (Agri). WAULT 11.20 years to expiry. £58,550 pa passing rent. Under Offer at approx. 7% NIY. Higher than the Guide of £750,000
Industrial Market Conclusion
Across Cornwall, Plymouth, and Exeter, industrial property remains a resilient sector, albeit with evolving dynamics. The key trends include:
- Continued demand for freehold and leasehold units, with owner-occupiers driving sales.
- Rental price stabilisation.
- Business rates pressures, creating a two-tier rental market.
- Supply shortages, particularly for well-located, mid-sized units.
- Challenges in new development, with high build costs discouraging speculative projects.
Looking ahead, stock levels will play a critical role in shaping the market. While some areas may see values soften due to increased availability, demand remains strong for high-quality industrial space, ensuring continued interest from both investors and occupiers.
Retail Property Market Update
The retail property market across the South West presents a mixed picture, with some areas experiencing strong demand while others face ongoing challenges. Rising business costs, shifting consumer behaviour, and changing retailer requirements are influencing trends across Plymouth, Cornwall, and Exeter.
Retail Market in Plymouth
Retail transactions in Plymouth have declined from 46% to 26% over the past year, reflecting the increasing difficulty retailers face in maintaining viable businesses. Rising costs—including National Insurance, the living wage, and the end of retail rates relief—are placing additional pressure on operators.
While demand from local retailers has softened, national retailers remain active, taking a long-term view and securing well-positioned properties in locations where they have gaps. However, they typically require units of at least 2,500 sq ft at ground level with fully glazed active frontages, which can be difficult to find in historic market towns and conservation areas.
City Centre & Out-of-Town Retail
- City Centre Strength: The prime retail area—from east of Armada Way to Drake Circus—remains strong, with Drake Circus fully let and retailers investing in store refits, signalling their commitment to Plymouth.
- City centre improvements: Now that the public realm works are complete on New George Street and Old Town Street this is attracting interest from investors who see Plymouth as an attractive opportunity.
- Large Units & Leisure Operators: The larger spaces generally attract interest from leisure operators, but these businesses are now less active compared to a year ago. When they do engage, they require significant landlord incentives, making deals less attractive.
- Retail Parks & Drive-Throughs: Out-of-town retail parks and drive-through units continue to be in high demand, with locations such as Derriford’s M&S experiencing strong footfall, reinforcing the long-term trend for convenience retail.
Retail Market in Cornwall
The slowdown in Cornwall’s tourism industry over the past year has had a direct impact on retailers in popular seaside destinations. If another weak tourism season follows, the retail market could experience further challenges.
However, Truro has seen a resurgence, with national retailers such as Krispy Kreme, Poundstretcher, Tesco, and Greggs opening stores. This has led to high occupancy levels on primary streets, likely driven by rent adjustments making locations more attractive to operators.
Retail Market in Exeter
Exeter’s retail market remains cautious, with high viewing numbers but slower decision-making from retailers. However, Exeter High Street remains strong, commanding high rents and seeing continued demand.
- Expanding Retailers: Brands such as Saltrock and Coffee No 1 are actively taking more space.
- Independent Retail Success: Smaller retailers are performing well, particularly in locations with strong local connectivity and community engagement.
- Struggling Locations: More isolated towns are experiencing falling rental values and reduced interest from occupiers. However, towns such as Totnes, St Ives, and Dartmouth continue to thrive.
Key Takeaways & Retail Investment Opportunities
- Retailers that invest in their brand and engage with customers—through social media and innovative marketing—perform better.
- Prime retail locations, particularly in Plymouth and Exeter, continue to show strength.
- Convenience retail, drive-throughs, and well-connected towns are key areas of growth.
- Investor interest remains, particularly for well-located, high-yield opportunities.
Current Retail Investment Listings:
- 16, 18, 20 Princess Victoria & Waterloo Street, Clifton Village, Bristol – £1.9m Guide Price (6.50% NIY). Comprising 5 shops and 3 flats above, generating a £120,600 passing rent.
- Tesco Express, Main Road, Exminster – £950,000 Guide Price (7.40% NIY). £74,290 passing rent with a reversionary rent of £85,510 (8.52% NIY).
Retail Sector Conclusion
The South West’s retail market is evolving in response to economic pressures and shifting consumer preferences. While prime locations remain in demand, weaker areas are seeing increased vacancies and stagnating rents. National retailers are still targeting key gaps, particularly in convenience and drive-through retail, while independent retailers continue to perform well in high-footfall, well-connected areas.
The Office Market in the South West
Cornwall
The office market in Cornwall has continued to adapt to changing work patterns, with hybrid working now well established among most businesses. This shift has contributed to a moderate increase in demand for office space, particularly in Camborne, Pool, Redruth, and Truro. Rental rates for modern office facilities in prime locations, particularly those with ample parking, have ranged between £9 and £13 per square foot over the past year.
Smaller office spaces, especially those under 1,500 sq ft, remain the most sought-after, particularly when landlords offer incentives such as stepped rental increases or rent-free periods. Chi Tevyans, for example, has seen strong uptake, with 75% of its suites now either let or under offer, demonstrating the effectiveness of rental incentives in attracting tenants.
A recent survey revealed that 67% of occupiers would require rental incentives to consider relocating. The primary reasons cited for moving included outgrowing current premises and seeking a better working environment.
The freehold office market in Cornwall has also seen increased activity, with recent transactions including three office blocks sold within the county. Notably, one of these was acquired for redevelopment into a care facility, while others, such as Pendennis Court and Haven House, will remain in office use.
Plymouth
Plymouth’s office market has experienced a significant shift, now accounting for 40% of transactions—an increase from 32% the previous year. This marks a substantial change for a sector that has historically struggled in the city.
Demand is particularly strong for:
- Offices no larger than 1,500 sq ft
- Out-of-town locations
- Properties with good parking provisions
- Modern, well-presented spaces with high EPC ratings
Refurbished offices at Parkway Court, for instance, are commanding rents of £14 per square foot. The landlord has taken a proactive approach by fully refurbishing the space, ensuring high EPC ratings and modern finishes. Meanwhile, unrefurbished offices remain attractive due to their affordability, achieving rents of around £10.50 per sq ft.
The improvement in Plymouth’s office market can be attributed to post-pandemic recovery, with businesses seeking higher-quality workspaces as they expand. Demand is broad-based, spanning multiple sectors beyond professional services.
Another notable trend is the increasing reuse of fit-outs left by previous tenants. Rising construction costs and sustainability concerns have led businesses to reconsider stripping out and replacing interiors, a stark contrast to the common practice just five years ago.
Exeter
Exeter’s office market remains challenging, with limited availability in the city centre. The lack of suitable stock has led many occupiers to stay in their current premises and invest in refurbishments rather than relocating. Hybrid working remains the dominant model, making office amenities a key consideration for businesses seeking to attract and retain staff.
Grade B office space is seeing minimal activity, Landlords are increasingly prioritising the future-proofing of their assets by ensuring high environmental, social, and governance (ESG) standards, as sustainability remains a major factor for occupiers.
Flexible lease break terms continue to be a popular negotiating point, as businesses seek greater agility in their property commitments.
Recent notable examples of market activity in Exeter include:
- A large office in Southernhay, currently under offer at just under 9% Net Initial Yield (NIY)
- 1 Lime Court, South Molton, let to Azets Holdings Limited for £55,000 per annum, with a sale price of £490,000 (8.88% NIY) available now
Office Market Conclusion
The office market across the South West has demonstrated resilience and adaptability, with a clear demand for well-located, modern, and efficient spaces. While businesses remain cautious, particularly in Exeter, strong demand exists for the right type of office stock. The trend towards flexible, sustainable, and high-quality workspaces is set to continue, shaping the region’s office market in the years ahead.
Interested in Investment sector? Please see this update on the investment market in the South West.
