Technology growth drives office boom
Cambridge’s booming office market continues to be a major draw for tenants and investors alike as the sector builds on a record-breaking year of activity, according to UK property consultancy Lambert Smith Hampton (LSH).
In the Office Market Pulse Cambridge report, LSH associate director Duncan Quig reveals that Q2 of 2014 delivered impressive office space take-up of 149,507 sq ft – taking the total for the year to 240,443 sq ft.
Another 300,000 sq ft of deals are in lawyers’ hands. Technology and life sciences are driving the take-up.
Quig said: “After a record-breaking year, it was always going to be difficult for Cambridge to maintain levels of activity in the market place.
“Q1 2014 delivered modest take-up coupled with the lowest level of availability in a decade and begged the question: Could the occupational market keep pace with the unbridled investment attention the city has been garnering in recent times?
“Performance in the sector during Q2 was on a par with the city’s 10-year average, but the remainder of 2014 has the potential to eclipse this as we are already aware of around 300,000 sq ft of deals that are in solicitors’ hands.”
The average transaction size so far this year is 6,165 sq ft compared to last year’s figure of 5,216 sq ft. Over half of Q2 take-up has occurred in the out-of-town market, with a reliance on technology, media and telecommunications (TMT), and pharmaceutical occupiers accounting for 75 per cent of deals done.
Quig added: “Following demand falling for three consecutive quarters we have recorded a 34 per cent rise in demand coupled with a notable return to unrepresented occupiers coming to market. Rental levels have continued to rise while tenant incentives have reduced marginally. Only 10 per cent of space under construction remains available to occupiers.”
Significant deals during Q2 include 6 Westbrook at Milton Road, which saw Solarflare take 12,574 sq ft of space on a five-year lease at a rent of £23.60 per sq ft; ARM agreed a three-year lease at £18.50 per sq ft for 11,485 sq ft at 100 Rustat House, Clifton Road; while the Internet Watch Foundation signed a 10-year lease on 9,034 sq ft at Discovery House, Vision Park, at a rent of £22.50 per sq ft.
“Despite strong take-up during Q2, availability has risen to 727,254 sq ft, an increase of nine per cent,”Quigg added.
“The average unit size available has increased from 5,517 sq ft last year to 8,080 sq ft, and Grade A space has fallen 45 per cent since the end of 2013, while Grade C space has spiralled by 81,638 sq ft – indicating a continued trend in occupiers trading up to better quality space.”