Bidwells’ latest analysis indicates Cambridgeshire remains a magnet for science and technology companies that are looking beyond the current Brexit uncertainty
The analysis of the Cambridge office and laboratory market finds that 0.6 million sq ft of new space will be completed during the first half of 2019. This is the highest level of new supply in over a decade. This perhaps sounds alarm bells given the apparent slowdown in demand for labs and offices combined to 1.154 million sq ft at the end of 2018.
However, despite Brexit fears, the UK’s BioTech sector continues to thrive and Cambridge has been at the centre of growth in the UK’s BioTech sector over the past five years. Investment in the city continued to flood into the industry, with £1.6bn raised in the first eight months of 2018, already 33% ahead of the figure raised over the whole of 2017.
The University of Cambridge tops the list of capital raised by spin-out companies as research undertaken by Global University Venturing has revealed that the University of Cambridge has raised the greatest capital investment from its spinout companies amongst the world’s universities. Between 2013-17, spinouts from the University of Cambridge raised £1.75bn, 20% more than the second place Stanford University £1.43bn.
University of Cambridge Enterprise reported a further £300m investment to 16 spinouts in 2018, although the final year figure is expected to be in excess of this figure. New Digital Strategy for Cambridge funded by CPCA Cambridge & Peterborough Combined Authority has provided initial funding to Cambridge Wireless and Anglia Ruskin University to develop an integrated and impartial digital strategy, helping to promote the region’s strong technology sector.
Cambridge already has a significant representation in the growing Artificial Intelligence sector, with Apple, Microsoft, Amazon, ARM and Samsung all having AI research teams based in the city.
According to Bidwells’ data, 85% of space is pre-let or already under offer. This, in theory, leaves a total of 91,000 sq ft available during 2019 with an expectation of more than 50% of space to be let shortly after practical completion.
This pre-letting activity, combined with a slight increase in take-up in 2018 compared with 2017, underpinned a further increase in rents. During the second half of 2018, the prime office rent rose to £41.50 psf, with increases also seen for all grades of second-hand space. The prime rent for laboratory space also rose in 2018 to £34.50 psf.
These latest lettings figures are consistent with the findings of research undertaken by Bidwells on the location and property requirements of major R&D companies. The research, undertaken by YouGov on their behalf, underlines the importance of location. The ability to recruit highly skilled staff, combined with the requirement to be near the centre of research ideas and innovation are the determinants of location for such businesses.
With a global outlook, these companies will consider location from an international perspective and therefore are compelled to be exacting in their requirements.
Sue Foxley, Research Director at Bidwells commented,
“According to our survey, 52% of the global R&D companies expect their R&D budget to grow over the next five years, while 30% think it likely they will take new floorspace, predominately due to expectations of business growth. The availability of property to grow a business was considered extremely important, considerably more so than the cost or lease terms of that space.”
“This clearly has implications for location decision-making on top of concerns over access to skills and innovation which preoccupy all knowledge-based businesses. Given the recent tightness in the Cambridge office and laboratories market, particularly in the accessible in-demand locations, it is therefore unsurprising that such companies are opting for pre-lets.
“With the business priority to keep pace with expectations for “continuous innovation” as noted by many of our respondents, taking the risk on the market to supply the goods, particularly for specialised laboratory space, is increasingly not an option.”