Cambridge: time to revise allocation of land uses?
The onset of a new season, particularly spring, seems to create a certain momentum in the business community.
This was evident a few weeks ago when our rural colleagues held a breakfast seminar on the same morning that the Carter Jonas commercial and planning and development teams hosted many in the business community at our Commercial Edge launch.
Our annual research report, the Commercial Edge provides a great opportunity to look back at how the market has performed over the last 12 months, and allows us a chance to consider what’s next for the property industry and most importantly, businesses in Cambridge.
What really struck me, when looking at the data in this year’s report, is just how much the months leading up to the EU referendum, and the immediate aftermath of the vote to leave, impacted the market.
In the last quarter of 2016, total office and laboratory take-up reached 450,000 sq ft of space. This was a significant increase on the first three quarters of the year.
Until the final quarter, take-up in any of the three-month periods failed to record even 100,000 sq ft of space. This seems to highlight just how many business occupiers were adopting a ‘wait and see’ approach when it came to making decisions about their property needs. It also seems to demonstrate how, once people got over the initial impact of the vote to leave, many occupiers got back into a “business as usual” positon.
In the context of this uncertainty, as well as the truly stellar performance achieved in 2015, we feel pretty encouraged as to how resilient the Cambridge market was last year.
We saw demand from both domestic and international occupiers and eight transactions were recorded in the 20,000 sq ft and above category including one ‘super deal’.
Abcam took 100,000 sq ft of space at the Biomedical Campus. The average transaction size across the city also increased marginally from 7,469 sq ft in 2015 to 7,613 sq ft in 2016.
Perhaps not so encouraging is the continuing issue of availability, or lack of it. At the beginning of this year overall availability of existing office and laboratory space stood at 870,000 sq ft – marginally down on 895,560 sq ft at the same time last year.
A significant majority of this space is located within the wider business park areas, including the Cambourne Business and Cambridge Research Parks. Across the city there continues to be a distinct shortage of larger floorplates, notably of those over 20,000 sq ft - often this is the size that is most attractive to firms. Of the 96 available properties at the end of 2016, 78 were less than 10,000 sq ft while only eight could provide accommodation over 20,000 sq ft.
Looking forward, landlords will likely benefit from this lack of space, and could use it as an opportunity to increase rents at reviews and lease renewals.
However, all is not lost for occupiers; Cambridge has a positive development pipeline in the city centre and the surrounding areas, which I hope will redress the imbalance.
Additionally, the development of CB4 to the east of the Science Park and Cambridge Business Park will help attract and accommodate new occupiers, with the new train station, due to open in May 2017, only adding to Cambridge’s appeal.
However, many consider this a small step in the right direction. As a city we need to continue to attract domestic and international occupiers, and benefit economically as a consequence. Because of this, I wonder if there is an argument that the allocation of land uses should be revised.