Jon Silversides, partner, commercial for Carter Jonas Oxford, evaluates the commercial property market in Oxfordshire and looks at where the significant demand must be met.
As has been widely reported by Thames Tap commentators, 2020 was a resilient year for the Oxfordshire commercial property market.
The county continues to benefit from significant inward investment, Oxford recording the highest levels of venture capital (VC) funding in the UK and is at the forefront of the UK’s scientific effort to fight against Covid-19.
Office/lab take-up totalled 285,000 sq ft in 2020, above our 2019 figure and only just below the 10-year average.
A most striking stat is that an average of 65 per cent of total take-up over the past three years is within science-related sectors. Similarly, in the industrial market, take-up totalled 1.8 million sq ft, our highest figure on record and matching the national picture.
Running alongside this is a voracious appetite for development opportunities in both key sectors, with a raft of developers and investors looking for elusive sites, which I liken to a gold rush!
Of course, we already have the key, well-funded science parks and industrial schemes such as Harwell, Milton Park and The Oxford Science Park on one side and the large industrial focused schemes in Banbury and Bicester.
In one week alone this month, there were press announcements suggesting around one million sq ft of development within Oxford city core. Does anyone want to take a wager on the speed of such delivery?
And here is the crux of my brief comment – availability and delivery.
In the office and R&D market, only the Harwell Campus and Oxford Technology Park have buildings under construction.
Whilst we are due to see further development at the business and science parks, at best, there is a time lag of 18 months before buildings are complete, with science occupiers thereafter having to undertake specialist fit outs.
This time lag is, in turn, adding further fuel to the growing quantum of hybrid, industrial-style buildings being offered to the market.
These are currently at Harwell and Oxford Technology Park but are due at Oxford Business Park; these are quicker to build and, in turn, provide occupiers with a cheaper rental solution and volume of space to fit out.
Within the industrial market, there is around 900,000 sq ft of buildings under construction in the market. Consequently, the suggestion that there could be a shortage may seem illogical; scratching below the surface, 70 per cent of this figure is contained within just four buildings, as developers continue to build bigger units in response to market demand.
There is, however, now a shortage of small to medium size units, with just three buildings being delivered between 20,000 and 90,000 sq ft in the next 12 months!
Whilst these challenges are arguably not new, as someone who has practised in Oxfordshire for more than 25 years, it feels like we have a real, head of steam building, which will be great for the county but does need a proactive response from our property community.
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