31 December, 2018 - 16:53 By News Desk

Helping Cambridge match China and Silicon Valley

The general sentiment within the Cambridgeshire commercial property market has been ‘business as usual’ throughout 2018, writes Philip Woolner, joint managing partner at Cheffins. 

Following the upheaval of 2016 with the Brexit vote, its knock-on effects throughout 2017, by comparison 2018 has seen a solid but steady market, with healthy appetite for property across all sectors. 

The Oxford to Cambridge growth corridor, or CaMkOx arc, has seen greater profile this year having been mentioned in both the Spring Statement and the Autumn Budget. 

This driven emphasis from central Government and commitment from The Chancellor has helped to underpin the demand for all commercial property types locally as investors look to cash in on Cambridge’s continued dominance as one of the UK’s leading centres for R & D, tech and AI. 

The hope is that the development of the ‘brain belt’ will further ignite the UK’s prosperous R & D sector and help to increase knowledge sharing and talent between the two cities, whilst also unlocking a number of potential sites for development between the two university towns. 

In addition, the government’s focus on the knowledge economy has led to strong demand for investment property throughout the year as top-level funds look to include Cambridge within portfolios. 

This seems set to continue, particularly within the R & D and office markets, during 2019.

Increased devolved powers and funding for local infrastructure has given Mayor James Palmer the ability to drive Cambridge forward in its quest to be one of the UK economy’s success stories, no matter the outcome of Brexit negotiations. 

Mayor Palmer’s ambitious infrastructure projects are aimed at redressing the economic imbalance across the region in order to allow Cambridge to fulfil its potential as a global competitor alongside Silicon Valley, Boston, Shenzhen and Shanghai.

Mayor James Palmer
Mayor James Palmer

Office and R & D

Against the backdrop of uncertainty, the office and R & D markets for the Cambridge Cluster have maintained a steady pace. The leading lights in the market have been newly-built developments which have seen a real focus of demand. 

Illustrations of this would be the popularity of 50/60 Station Road in the city centre and especially the Maurice Wilkes building on St John’s Innovation Park, which let up quickly against an increasing supply of good quality second hand space across the northern fringe with the new space being preferred despite higher rents.

Whilst 2018 seems to have felt slightly subdued in comparison to previous years, perhaps due to the looming spectre of Brexit and all its associated uncertainties, major tenants in the Cambridge such as Arm, Amazon and Microsoft have all either taken or are looking for additional space. 

Similarly, there are rumours that Huawei are on the verge of committing to the development of their own major research campus on the edge of the city, whilst Samsung is also looking to significantly increase the numbers of staff employed at St John’s Innovation Centre. 

Samsung is following on from notable others in the field, such as Microsoft, PROWLER.io and Five AI, all of which have cemented Cambridge as one of the UK’s leading locations for AI companies.

So it can be seen that one way or another and despite inevitable bumps along the way, future prospects remain good as the market is powered by demand from these burgeoning organisations.

The Maurice Wilkes building


Whilst there has been significant investment into Cambridge startups and SMEs, a lack of addressable fitted space has led to a relatively muted lab market in 2018 in terms of take up. 

With lab fit-out costing anything up to £250-£300 per square foot, the traditional model for young or growing companies moving on from incubator space is to re-utilise fit out from larger companies and in turn move on into often pre-let space. 

However, currently there are few options for this method of expansion, which has led to an imbalance in the market at the moment. This should start to be redressed next year with new supply of this type coming into the market; at Chesterford Research Park work will start in January on the refurbishment of The Newnham Building to provide just under 40,000 sq ft of fitted space in up to four suites together with additional fitted space in the Gonville Building. 

Furthermore, works are on schedule to deliver over 100,000 sq ft of speculative new lab space in two buildings on the Babraham Research Campus by the end of Q1 2019, all of which indicates positive sentiment for the market next year. 

The consistent trend here will be the quality of environment on offer to allow these highly-competitive companies to recruit the best staff in the business.


The industrial market is characterised by a lack of stock, both in city locations and on out of town business parks, which has led to rising rental and capital values throughout the sector. 

Headline rents for new-build industrial units over 5000 sq ft are now in the order of £8.75 -£10.00 per sq ft as evidenced by lettings during 2018 at Buckingway Business Park Swavesey, Cambridge Research Park and Newmarket Business Park. 

In the case of Newmarket Business Park, Cheffins completed three large lettings totalling over 70,000 sq ft at rents between £8.75 and £10 per sq ft.  

The boom in online shopping and the increased importance of third party logistics has led to continued investment in the shed market and this will only grow throughout the next 12 months. Investment yields on good quality industrial are now at 5-5.5 per cent.

There is likely to be additional focus placed on smaller, regional-sized warehouses in strategic locations in order to serve demand for online buying, logistics and storage. 

Brexit and its potential impact on import and export could also lead to further demand for warehousing in key locations, such as the East Coast Ports, and is likely to have a generally positive impact on the logistics market.

The Ivy Brasserie on Trinity Street in Cambridge


The retail market is seeing one of its most challenging cycles yet, with rental levels in many areas remaining static at best and with weak occupier demand. 

Many high street retailers are falling by the wayside as a result of high property overheads, including business rates, falling footfalls and, most fundamentally, competition from online businesses. 

This has created some opportunities for smaller multiples and independent traders to set up shop in prime and good secondary units. For example, it is interesting to see some of the secondary streets in Cambridge such as Trinity, Sussex, and Magdalene/Bridge Street bucking the national trend with several recent new arrivals, bringing niche offerings based on high levels of customer service, and creating an exciting tenant mix.

The picture is mixed across the country and across the region, with expanding towns and cities such as Cambridge and its necklace settlements faring well and remaining vibrant; however in many areas the picture is much bleaker. 

As a result, many investors have sought to offload high street retail assets en masse and we have seen much more investment property coming to the market during the year. 

This has brought opportunities for smaller investors to pick up well-priced properties, often with development, change of use or other asset management angles.

2019 looks set to see many more high street brands either adapt radically to face the new reality or perish in the wake of the online retailers.

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