Combined office and laboratory take-up exceeded 0.8 million sq ft in 2019, the highest total since the record highs recorded in 2014/15 when AstraZeneca agreed its new global HQ and R&D centre space adjacent to Addenbrookes hospital on Cambridge Science Park.
While Brexit uncertainty has dented business investment, to which the R&D sector is particularly sensitive, the Cambridge market proved robust throughout 2019, with take-up moving well ahead of the 10 year average. Knowledge intensive businesses were responsible for over 81% of the space taken, roughly evenly split between the life science and tech sectors.
A number of new buildings completed during the latter half of 2019, the largest letting was at 30 Station Road, CB1. However, this was leased ahead of construction, a pattern that has become all too familiar in Cambridge in recent years. Availability stands at 643,300 sq ft, well below the current level of business space requirements in the market.
Adding to the occupational challenge is the increasing focus on quality, not just in terms of the space, but also green credentials. The workplace has always been viewed as a tool for recruitment of staff. But, in-demand knowledge talent, particularly in the science and tech sectors, are placing increasing value on environmental standards and the lifestyle offer embodied in their potential workplace. As businesses fight to recruit and retain highly skilled workers, these values cannot be ignored.
It is not surprising therefore that 2019 saw an increased focus on grade A space, accounting for 64% of total activity during in 2019. This has spurred an upturn in refurbishments over the last two years reducing the levels of poorer quality secondary stock. The options for such repositioning are now relatively limited.
Despite the high level of take-up in 2019, demand has not diminished. There are currently 1.2m sq ft of office and lab space requirements. There has been a particular upturn in larger floorplate requirements, comprising almost a third of office floorspace demand. This will maintain the focus of activity on pre lets, illustrated most recently by a leading global tech company securing 79,500 sq ft for occupation in 2021. The IT sector now occupies over 1.6m sq ft of science park floor space in Cambridge.
While the Cambridge development market remains active, 0.8 million sq ft of take-up is inevitably going impact on rents. 2019 saw prime rents in the Cambridge office sector rise 12% to an historic high of £46.50 psf, with a 10% uplift in the labs sector.
The viability of such growth is underwritten by the shift in the occupier base of the Cambridge market. Three quarters of the commercially occupied floor space in the city’s science and tech cluster is occupied by knowledge intensive industries. Such businesses will welcome the 0.45 million sq ft of floorspace we estimate will come forward over the next two years, although given the scale and depth of demand from the life science and tech sectors further rental growth will follow.
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