The laboratory sector is facing a particular challenge with over 400k sq ft of functional requirements, the highest level for five years. This demand wall is set against an availability rate of just 3.7%, inevitably placing pressure on rents.
The report research shows that office and laboratory sectors have shown severe shortages of Grade A stock with both sectors having only 9.70% of availability at the end of 2020.
The prime office yield remained stable at 4.5% meanwhile the average transactional yield for offices rose to 4.95%. Both are driven by robust rental growth due to the strong occupational demand from various sectors.
Laboratories also saw a significant rise in investor interest during 2020; however, standing assets remain limited. The limited number of transactions led the prime laboratory yield to 4.5% by the end of 2020.
Interestingly, knowledge-intensive businesses continue to dominate in Cambridge’s letting activity, accounting for 69% of the take up in 2020.
In December 2020 the most prominent office letting was completed with US Software company MathWorks leasing 93,000sq ft TusPark development within One Cambridge science park. MathWorks already occupies two buildings within the park, demonstrating a commitment to the Cambridge's ever-growing IT and tech cluster.
Fora has agreed to lease the latest addition to the CB1 innovation quarter at 20 Station Road. The new 64,500sq ft building is due to complete in 2023, with Fora agreeing to lease the whole building to keep up with Cambridge's demand. Due to the rapid expansion of the cities knowledge-intensive economy, Fora is among a small number of other businesses offering flexible space in the Cambridge market.
Over the next 12 months, several new schemes that total to almost 1 million are set to complete. More than 84% of this space is committed, leaving just under 130.00sq ft to come to market, helping to meet demand.
“The science and tech sectors drove investment transactions to £300m in 2020; we estimate that this will rise for 2021 for both offices and laboratories as industries continue to thrive, settling back to pre covid trend levels or higher. The main concern will be the lack of available 1st-grade space; however, we expect an increase of second-hand space to be released to the market, which has started to happen in 2020”- Sue Foxley, Research Director at Bidwells.
View Bidwells’ Spring 2021 report
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