High Tech Cambridge

A recent report by property consultant Carter Jonas spotlights the quietly booming Cambridge office market.

Cambridge is the UK’s pre-eminent location for research and development in high value industries such as pharmaceuticals, biotechnology and advanced engineering in software and electronics.

The Cambridge office and lab market enjoyed another strong year in 2015, with take-up exceeding 1.1 million sq ft – surpassing the 956,000 sq ft let in 2014.

Granta Park saw work start on Illumina’s new 155,000 sq ft HQ which will open in summer 2017; while Gilead announced a new 93,000 sq ft building and ARM took 195,000 sq ft at Peterhouse Technology Park in the city’s largest letting. However, the majority of deals recorded were in the sub-10,000 sq ft category.

Deloitte, Thales and Carter Jonas agreed pre-lets at the under construction ‘One The Square’ in central Cambridge, totalling almost half of the 142,000 sq ft building, ahead of its completion in November 2016. In the last year AstraZeneca, Apple and Spotify have all taken space in the city.

Metropolis is monitoring the plans of over a dozen companies with requirements or potential requirements in Cambridge. In addition, Metropolis is planning to speak to a further 100 Cambridge office occupiers with leases due to expire in the next two years.

Office and lab developments with outline planning consent totalled almost 3.8 million sq ft in early 2016. Granta Park is set to expand its 120-acre site with the granting of planning permission to provide 365,000 sq ft of new R&D space.

Forecasts for 2016 include greater competition for available space pushing rents to well over £30psf. Some decentralisation from the the more expensive core to the cheaper fringe areas. The pace of office refurbishment to increase as demand grows.

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Office Forecasts for 2015

Lambert Smith Hampton has published its latest ‘UK Vitality Index’ and has identified Guildford in Surrey as the location most likely to see expansion in 2015.

Guildford has replaced Cambridge as the destination best placed to support economic expansion over the next 12 months.

Metropolis has over 20 live Surrey office requirements added this year, compared to a dozen in Cambridge.

The results are based on the analysis of 20 datasets, with each location ranked within six separate categories: most productive, fastest growing, most entrepreneurial, best educated, greenest and most affluent.

Overall, the top 10 towns and cities in the 2015 UK Vitality Index are:

Guildford
Cambridge
Brighton
Reading
Warwick
St Albans
Milton Keynes
Oxford
Edinburgh
York

Oxford and York are both new entries into the top ten boosted by greater corporate investment and an increase in the number of recent business start-ups.

The report also identifies Manchester, Northampton and Derby as the most significant improvers over the past 12 months.

Metropolis would rank Edinburgh and Manchester as the locations with the most live requirements, with 40 new searches in Edinburgh in 2014 and 42 in Manchester in the last 12 months. With over 80% of UK GDP generated outside London and predictions of a revival in the regions next year, it is likely these towns and cities will prove increasingly important in 2015.

University projects rise from the ashes

Metropolis has noticed an upswing in the number of university building projects, being planned and tendered for over the last 2 years months. During the years 2012 and 2013 over 260 higher education projects have been reported by Metropolis each year, compared to less than 200 each year in 2010 and 2011.

In the past year, the volume of new space being planned has topped 600,000 sq m (6.5m sq ft) and the early indication from planning applications in early 2014 is that new floorspace being planned could rise further in 2014.

Recent examples include the University of Edinburgh’s £20m Old College Building refurbishment for the School of Law; a £29m medical centre at University of Surrey; a £42m Centre for Medicine at Leicester University; a £20m Far-Eastern centre for Oxford University and a £41m biotechnology building at Cambridge University, plus new law schools at Leeds and Manchester.

Government reports suggest that current high student numbers, combined with a change in methods of teaching learning and research are leading to a re-appriasal of facilities. New capital projects are being targeted to specific university objectives which will lead to a better profile for the university and the chance to increase investment returns. In parallel, universities need to attract higher income overseas students, so aim to build better high-end accommodation and recreational facilities, as well as launching new landmark schools of law or medicine.

Non-residential income at institutions has risen by nearly 11% in recent years, while the proportion spent on maintenance has fallen by a similar amount. So while income per student has been rising, the amount spent accommodating and teaching each student has been falling, freeing up more potential for capital investment.

Univ

As the examples above illustrate, plans for new higher education capital projects in the last two years are growing in number. Current plans reflect a clustering of schemes at Oxford, Cambridge and Edinburgh, as well as a surge of activity in the south west region. In some regions the higher education sector has become a main plank of some architect’s workloads. Figures from Metropolis show that number of higher education projects seeking tenders each month, has doubled in the last 6 months. The outlook, based on the current planning pipeline, is for this increase to be maintained into 2015.

Top towns forecast for 2014

Property consultant Lambert Smith Hampton has ranked 65 of the largest towns and cities outside London based on their economic vitality and the likelihood of an active property market in 2014

The top 10 towns and cities in the UK Vitality Index are:

Cambridge
Guildford
Brighton
St Albans
Reading
Wokingham
Maidenhead
Warwick
Milton Keynes
Bournemouth, Edinburgh, Reigate (joint)

Research by Metropolis particularly underscores the prospects for Cambridge (41 moves or requirements due in 2014); Reading (52) and Edinburgh (150).