Whilst Oxfordshire’s businesses are currently facing a marked lack of quality office and laboratory stock, with only 55,000 sq ft of grade A quality space currently available, Carter Jonas’ latest research identifies that there is capacity for approximately 7.48 million sq ft coming through the development pipeline, with an additional 2.09 million sq ft of consented sites in Oxfordshire’s main business locations.
The research identifies that approximately 340 acres of potential development land, in turn equating to approximately 7.48 million sq ft of office and R&D accommodation, is currently coming through the planning allocation process, in addition to current consented sites which total 2.09 million sq ft, totalling approximately 9.57 million sq ft of future office and laboratory space.
Based on the current five-year average annual take up of 250,000 sq ft, this equates to approximately 38 years’ supply. However, if the county starts to fulfil its potential and for example matches Cambridge’s 2015 take-up figure of 1.1 million sq ft, this pipeline supply will reduce dramatically.
The county’s immediate office and laboratory pipeline remains primarily concentrated around key business park locations around Oxford and South Oxfordshire including Magdalen College’s The Oxford Science Park, Harwell and Milton Park. These business parks are in general now better equipped to deliver stock than at any time in the past decade following significant investment in the majority of these and other schemes.
Jon Silversides, partner, Oxford commercial agency, Carter Jonas, expands further: “With the current lack of Grade A space, if we are to continue to meet the high demand from our growing knowledge-based sectors, significant investment is needed to deliver new office and laboratory stock.
“Whilst we appreciate that the debate is a little ‘chicken and egg’, equally, if we sit back then other national and global locations will attract investment ahead of Oxfordshire. There are signs that speculative development is returning to the agenda, notably at Harwell, and others are likely to follow suit. From an investment perspective, we believe that Oxfordshire represents good value, with business park quoting rents standing between £25.00 and £27.00 per sq ft, compared with other locations in the South East such as Reading and Cambridge where rents are over £35.00 psf. This differential is even more significant with London, where prime office rents in the West End are approaching £130 per sq ft.
For commercial property in Oxfordshire in 2016, Carter Jonas forecasts:
· stabilisation of existing rental tones in the short term, following the 2015 increases
· continued buoyant level of investor demand for Oxfordshire’s commercial property, due to its strong economy and rental growth prospects
· wider geographic spread of activity given asset management initiatives in key business parks and deliverable planning consents
· the completion of road improvements around Oxford and on the A34 will aid development prospects and will boost productivity for local businesses
· development activity increasing over the coming year, with the county’s short term pipeline focused on key business park locations in Oxford and south Oxfordshire
Jon Silversides added: “One of Oxfordshire’s main attractions is its highly skilled workforce, which is a major draw for domestic and international occupiers alike. With a diminishing amount of Grade A space, improved market confidence, landlord investment in existing stock and the fact that Oxfordshire represents good value compared with London and the South East, Oxfordshire’s commercial property market is buoyant and both investors and businesses will continue to benefit.”
Carter Jonas’ Oxford commercial team has been involved in some of the county’s recent most significant transactions: from the largest Oxford city centre office letting in two years at Clarendon House in Cornmarket Street; to the acquisition of a new headquarters building on behalf of The Diocese of Oxford in Kidlington, and the subsequent sale of its administrative headquarters at Church House in North Hinksey; to the successful sale of Caterham F1’s former headquarters, which is a 28 acre site in Leafield.
