The latest data from property consultancy Bidwells has found that both the Oxford and Cambridge office markets enjoyed a relatively strong start to the year, bucking the decline in demand seen in other UK cities.
Office take-up in the two cities totalled 335,000 ft2 (31,100 m2) in the first half of 2024, an increase of 17% on the corresponding six months of 2023. Although some occupiers in Oxford and Cambridge have downsized as they have switched to hybrid working, this has been more than offset by the growth of science and tech businesses.
Tech hardware companies have been particularly active so far this year, reflecting the growth in AI and data centres, and tech and science firms accounted for 94% of take up across the two cities in the first half of 2024.
The laboratory markets in Oxford and Cambridge were quieter in the first half of 2024, but Bidwells expects an uptick in the second half of 2024. Venture capital funding has started to recover after a hiatus in 2023 and this should feed through to an increase in lab demand from university start-ups and scale ups.
Furthermore, Bidwells says that there has recently been a pick-up in interest from big pharma companies, reviving lab requirements which were previously on hold.
By the end of 2029, Bidwells forecasts rents for prime labs in Oxford to be 18% higher, and prime office rents up 23%. Cambridge is expected to see similar levels of growth of 30% and 26% respectively over the same period.
There are also signs that the investment markets in Oxford and Cambridge are staring to thaw. A number of deals which had stalled in 2023 have started to progress and investors are once again considering re-development opportunities, as well as prime offices and labs.
In part this reflects the re-pricing of assets since mid-2022 and in part it reflects the recent fall in debt costs as financial markets anticipate that the Bank of England will cut interest rates further later this year.
Mark Callender, research partner, Bidwells, said: 'The arrival of new floorspace to the Oxford Cambridge supercluster has facilitated record take-up levels from companies working in the knowledge intensive industries. This is a promising sign and will mean the region is well placed to reach the critical mass needed to fulfil the region’s full potential in growing in the UK economy at large.
'Though further measures must be taken to support the industry in regard to facilitating the delivery of new workspace, infrastructure, and housing, the outlook for investment in science and technology real estate in the Oxford Cambridge region is now at a much better place than it has been over the last two years.'
