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Low supply underpins office market in Cambridge

Written by Ben Fountain

Thursday, 03 April 2008

Demand for offices in and around Cambridge has weakened over the past six months according to Ben Green of Cheffins Commercial, with the level of new enquiries down compared with this time last year. He is quick, however, to point out that whilst demand may have fallen as a result of the current economic climate, the supply of available offices remains quite low. This is in contrast to the previous downturn at the start of the decade prior to which developers went on a building bonanza on the back of the dot.com boom. Developers have been much more cautious this time round keeping levels of supply closely in check with demand. According to Ben Green, the current slow down is unlikely to lead to a fall in rents in the Cambridge area, which are more likely to plateau following recent rises. Indeed, in prime locations such as the city centre and business parks around Milton Road, where availability of quality stock is scarce, rents are still rising. This is demonstrated by the recent letting of part of the new 101 Cambridge Science Park to Philips Research at a new high of £25 psf pa. Also, the proposed new city centre developments of Twenty One Station Road and Academy House on Hills Road are expected to achieve over £25 psf pa. Whilst occupiers may not be able to capitalise on lower rents, if demand remains sluggish they could benefit from increased incentives offered by landlords whose properties are sticking. These include longer rent free periods or capital contributions to assist with fit-out. Where possible, landlords will resist dropping the current prevailing (or headline) rent as this undermines the value of their investment, but instead will look at these other ways to ‘soften’ the deal.  Ben Green adds, however, a word of caution to occupiers thinking about delaying a move in the hope of getting more favourable lease terms in the future as this action could result in losing out on the right property given the low level of availability in some areas.  The market slow down should also work to the favour of tenants with forthcoming lease expires by improving their negotiating position with their existing landlord. Set as favorite Bookmark Email This Hits: 197 Trackback(0) TrackBack URI for this entry Comments (0) Subscribe to this comment's feed Write comment This content has been locked. You can no longer post any comment.

 

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