Cambridge Office Space At A Premium And Will Be For The Foreseeable Future
Cambridge has the best prospects for economic growth of any UK city outside of London, according to Lambert Smith Hampton’s UK Vitality Index 2017. With a highly educated population, and a hub of scientific innovation with a restricted supply of office property, the city is a perfect storm of opportunity for commercial property investors.
Space in the city centre is very constricted, and as a result the occupier market is one of the strongest in the UK. Prime office rents rose from £30/SF in 2015 to £36.50/SF in 2016. Science and business parks achieved average rent of £31.75/SF in 2016.
Office investors are achieving yields of around 4.75%, comparable to London, but with anticipated rental growth. While take-up declined in 2016, the Cambridge office market nonetheless had a good year, particularly when viewed in the context of a very strong 2015 and the uncertainty created by the EU referendum. Indeed, the referendum was the key driver behind the pattern of take-up during the year, which saw activity heavily skewed toward the final quarter.
The city’s development pipeline was a healthy 3.1M SF at the end of 2016. This represents an 18% decrease on the 3.8M SF at the end of 2015. This year promises to be a big one for Cambridge as several projects recently got off the ground. Aviva funded 50 and 60 Station Road, the largest speculative office development ever in the city centre. This forms part of Brookgate’s CB1 development, which includes a public square, offices, student accommodation, retail and leisure and a £4.5M railway station upgrade, due to be delivered in early 2019. CB1 has already attracted notable tenants, including Deloitte and Amazon, the latter being its first UK non-R&D or call centre office opening outside of London.