According to Savills, take-up in the Cambridge office market continues to be characterised by sub 10,000 sq ft (929 sq m) deals, accounting for 25% of transactions in the first half of 2018. This has been driven predominantly by the thriving SME and start-up community with tech occupiers making up 36% of leasing activity.
Despite this, development being carried out across the city and the parks primarily caters to larger occupiers. At present there is more than 530,000 sq ft (49,238 sq m) of office and laboratory space under construction, 39% of which has already been pre-let prior to completion to established firms such as Darktrace, Mewburn Ellis, PwC, Abcam and Costello Medical. Savills notes that as a result, the city has seen an influx of serviced office providers looking for space, with more than an estimated 100,000 sq ft (9290 sq m) of requirements currently in the market.
For example, a mainstream co-working provider is rumoured to be under offer on circa 50,000 sq ft (4,645 sq m) at CB1 by Cambridge station in the heart of the city’s tech cluster, with other operators also looking nearby. Savills believes that with minimal incubator space available, serviced offices could help to alleviate demand in the short term.
The emergence of serviced offices is likely to lead to a polarisation across Cambridge between HQ buildings and those with large floorplates and sub 10,000 sq ft (929 sq m) accommodation. Savills believes that there is still a lack of grow-on space with practically no availability within the lower to mid-range size bracket to cater for those seeking to graduate from serviced accommodation. As a result, rents have increased dramatically with this type of second hand space now under offer at £34.50 per sq ft (£371 per sq m), a 15% increase on 2017 figures.
William Clarke, director in the business space team at Savills Cambridge, comments: “In the past start-up firms in the city have formed the bedrock of the Cambridge office market, with some companies going on to form the next multi-million pound corporations. For this reason it is essential that we continue to nurture this type of business by providing the right facilities and ecosystem, and the emergence of serviced office and co-working space is essential to achieving this. However, moving forward we also need to ensure that we cater to the middle ground in order to capture these companies as they continue to grow and provide appropriate leasing structures to assist with the fast-growth nature of many tech and R&D companies.”
