The Oxfordshire market saw its largest ever supply of new speculative industrial stock in 2019 – and 2020 could see even more.
The INTEL commercial property report by VSL & Partners says 375,000 sq ft of speculative industrial stock was recorded last year leading to an increase in supply of 64 per cent to 1,360,000 sq ft, up from 828,000 sq ft in 2018.
Although rents continue to rise, there is a mixed picture overall with take up of both office and industrial having declined. Office transactions fell significantly since the highest levels were recorded two years ago. A total of 28 office transactions were recorded in 2019 compared to 52 in 2017, while 35 industrial transactions took place compared with 49 in 2017.
The annual report analyses both office and industrial markets, specifically in central Oxford and the A34 ‘Innovation Knowledge Corridor’. It accounts for office deals from 3,000 sq ft and above and industrial from 5,000 sq ft and above.
VSL Director Tom Barton said: “Further speculative industrial supply is forecast for 2020 and we predict 2020 will be a new record for stock delivered to the market, providing a further 700,000 sq ft. This will dwarf the level of stock delivered in 2019 and reflects investor and developer confidence in the Oxfordshire market.
“The delivery of new stock will be focused almost entirely around the towns of Bicester (230,000 sq ft), Didcot (310,000 sq ft) and Witney (164,000 sq ft) where land has been released via a well planned local authority planning framework.”
He explained that the domination of demand experienced in recent years from the science and technology sector, waned in 2019.
He went on: “This sector still accounts for 63 per cent (70 per cent in 2018) of office take up but has sunk to only 26 per cent (64 per cent in 2018) of the industrial market.
“Our records don’t take into account the smaller lettings and there is a strong feeling that spin out activity continues to be positive with OSI plc (Oxford Sciences Innovation which helps firms find funds) ready to fund the intellectual property emanating from the universities.
“We believe that this market will bounce back in 2020 as the upsurge in start-up companies recorded in recent years mature with 2nd and 3rd round funding leading to new property requirements.”
The report also contains an interview with Peter Wilder, head of property for OSI. It can be downloaded here.
* Image (l-r): Richard Venables, director of VSL and Peter Wilder, head of property for Oxford Sciences Innovation plc (OSI) at OSI’s Grassroots offices at 46 Woodstock Road.
© Thames Valley Property No 195 (tvproperty.co.uk)