Bidwells, a property consultancy focused on the Arc, has revealed that combined office and lab take-up in Oxford totalled 117,600 sq. ft between January and July of this year, reaching 85 percent of the city’s 10-year average.
In Cambridge, combined office and lab take-up totalled 130,300 sq. ft. in the same period. Although this only equates to 40 percent of the city’s 10-year average, the first six weeks of Q3 have seen a further 50,000 sq. ft of transactions complete and there is a significant volume of space under offer which, when complete, will bring the percentage closer to 80 percent.
This is in comparison to other major regional cities in the UK which generally have lower exposure to the science and tech sector which has remained relatively buoyant. According to Avison Young, the UK’s Big Nine cities have seen the lowest levels of take-up since the property services firm began collecting data in 2009, with levels up to 75 percent below their respective 10-year average
In comparison, the core Arc locations of Oxford and Cambridge have seen market activity continue throughout lockdown. Not only are businesses in the region working on Covid-19 related testing, therapies and vaccines, but also continuing with their wider scientific endeavours.
The Covid-19 vaccine developed by researchers at the University of Oxford, to be manufactured by drugmaker AstraZeneca, is one of the most advanced in the world having moved to Phase II/III testing. An agreement to supply up to 400 million doses has been reached with Europe’s Inclusive Vaccines Alliance.
Heightened activity in the region’s science and tech sectors also means the Arc continues to play a crucial role in preserving highly-skilled employment opportunities.
Figures from the Office for National Statistics (ONS) revealed that Cambridge has seen one of the lowest take-up of the Government’s job retention scheme, with only 11.5 percent of employees furloughed at the end of June. This compares to the national average of 27.9 percent.
In Oxford, just 13.2 percent of the city’s workforce is retained via the Government’s job retention scheme as of June.
As a global exporter of innovation and a creator of highly-skilled employment opportunities, the Arc’s cluster of life sciences, research and development and tech industries will be crucial to the UK’s economic response to Covid-19.
However, a lack of development is threatening to stifle growth in the region which Bidwells estimates could contribute almost 11 percent of UK GVA by 2050, up from six percent today and equivalent to £100bn a year.
Bidwells estimates that the Arc will need up to 20 million sq. ft of new office and lab space within the next two decades to keep pace with soaring demand, double the volume of the previous 20 years. Rising office and lab rents, caused by a mismatch between supply and demand as well as a lack of infrastructure investment, is threatening to stall the rapid growth of the region by pricing out businesses and talent.
These problems are compounded by low vacancy rates in Oxford and Cambridge, which stand at 6 percent and 3.5 percent respectively.
Prime office rental values in Cambridge remained steady in H1 2020 at £46.50 per sq. ft, while rising in Oxford to £44 per sq. ft.
Bidwells recently topped Estates Gazette’s EG Radius Cambridge 2020 league table, with 393,724 sq. ft of space transacted in 2019-2020. The property consultancy led the largest deal in the city, in which Apple’s European decision took 79,453 sq. ft of city centre space.
Sue Foxley, research director at Bidwells, said: “As the Government looks to the future of the UK economy and the levelling up agenda, the importance of science and technology to the national economic future is evident. The Arc’s response to the pandemic has emphasised the value of having high tech manufacturing facilities cheek by jowl with laboratories, research institutes, teaching hospitals and the like. Together, the area has demonstrated the power of collective ingenuity and collaborative culture.”
Max Bryan, head of laboratory and office agency, Cambridge Bidwells, said: “Considering the unprecedented challenges of the past few months, occupiers in the key markets of the Arc have continued to progress transactions. Demand for space remains resilient, testament to the importance of key science and tech sectors in a Covid-19 world. Positively, we continue to see certain businesses thriving and expanding their footprints; the challenge for these successful occupiers is that good quality offices and laboratories remain in short supply.”