Cambridge looks set to dominate the regional office market — closely followed by Oxford and Bath — a report by property consultancy Carter Jonas is claiming.
In the agency’s latest Commercial Edge survey, which spotlights key UK commercial property locations and their spheres of influence, the three cities far outshine their rivals when it comes to office investment returns — with Cambridge topping the league as far ahead as 2019.
Against the national office forecast of an average of 6.8 per cent for the next four years, Cambridge is set to see an annual return of 9.3 per cent, with Oxford and London’s West End joint second with 8.1 per cent, followed by Bath at 6.9 per cent.
“The weight of money in the market is seeing investors shift their focus to the UK regional markets and, in particular, those locations which host leading universities with an established international reputation for excellence,” explained Will Mooney, a commercial partner in Carter Jonas’s Cambridge office.
“Looking ahead for Cambridge, we will see refurbishment and reconfiguration of poorer quality stock increasing due to very limited availability and continuing demand in size brackets.
“More interesting is the effect the big name occupiers — such as Apple and AstraZeneca — are having on the market this year,” he added. “It is this level of occupier who will change the game for agents and occupiers this year and into 2016 and who will be setting the tone of the market for years to come.”
The report also forecasts that the University of Cambridge and its colleges would increase the direct development of their land holdings to “shore up the city’s property pre-eminence”.
At the end of 2014, the availability of completed office and laboratory stock above 5,000 sq ft stood at just under 820,000 sq ft, a 32.5 per cent increase on the previous year.
There are currently 11 buildings over 20,000 sq ft available for let, all located on business and science parks “and therefore only appropriate for a limited number and profile of occupiers”, says Commercial Edge report.
“The range of good quality stock in prime locations remains a concern, but supply will be improved with an increase in development activity during the rest of 2015,” it adds.
“An increase in development activity is a positive step, but the choice of stock for businesses actively looking for accommodation will not increase much.”
The development pipeline of Grade A offices and world class research facilities, with planning consent already granted, remains “stable” at 2013 levels at around 2.8-million square feet at the end of last year.
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