Written by: Jon Silversides Photography by: Aurelian Langlais (portraits)
Oxfordshire office market update
Recent data compiled by our Oxford team shows that half year office take-up totalled 389,634 sq. ft., already equalling the take-up for the whole of 2016.
Of particular note is that approximately 77% of these deals have involved the knowledge/science based sector. This is a key growth strand for both Oxfordshire and the Government’s economic plans and it is this sector that is showing the most reason for optimism.
Luckily for the County’s principal science park locations of Milton Park, Harwell and Oxford Science Park, this surge in activity comes at a time when we are also seeing the largest volume of speculative development being undertaken in living memory with over 300,000 sq. ft. of primarily science targeted stock under development, and more planned.
The largest single deal so far this year has been on Oxford Science Park, where Oxford Nanopore Technologies Ltd acquired the Danby building totalling 55,175 sq. ft., whilst Immunicore Ltd has leased a total of 101,500 sq. ft. across three different buildings at Milton Park.
In terms of headline rental values we now regularly see quoting rents on or above the £30.00 per sq. ft. mark for prime stock in the above locations and a general acceptance that these are now achievable rather than aspirational. As with any market place there are of course exceptions to this, with Oxfordshire’s various submarkets showing a wide range of availability and quoting terms, but in general all are seeing rental increases.
Oxfordshire Industrial Market
Our half year take-up for the industrial sector has also been encouraging with activity mirroring the figures for the first half of 2016 at 741,757 sq. ft., despite a relative lack of stock, which otherwise may prevent the final year figures being higher. Since compiling this data it is worth noting that British Bakels has also exchanged contracts for an 80,000 sq. ft. turnkey facility at Link 9 in Bicester, where the developers, Albion Land will now build a mid-range unit speculative scheme totalling 146,000 sq. ft.
This scheme should be well received as, despite current speculative development in the County amounting to 285,000 sq. ft., this total comprises just three larger buildings in Bicester and Banbury. A number of occupiers looking for mid-range stock are unable to satisfy their requirements due to a lack of availability.
This lack of mid-range stock has resulted in a gradual increase in the County’s rental tone with rents now typically ranging from £6.50 per sq. ft. up to around £10 per sq. ft., for key Oxford located stock; in turn freehold opportunities are virtually non-existent and this scarcity has been a key driver of values.
Oxford Retail Market
Market sentiment remained stable in the Oxford retail sector during the first half of the year. Supply marginally increased within the City centre and rents remain unchanged in Cornmarket at £300 per sq. ft. and the High Street at £150-£200 per sq. ft.
The completion of the Westgate Centre, a development by The Crown Estate and Land Securities, will provide a notable change and uplift to the City’s retail and restaurant offering, with John Lewis being the key anchor tenant. Whilst a number of tenants are expected to relocate to the Westgate Centre from existing premises in the City, initial indications are that this is not expected to be hugely detrimental to the overall tone of the City’s market, given the relatively small area of the prime city core and that this will instead provide more opportunities for new entrants.
Rents are forecast to remain stable for the remainder of 2017 although may well rise moving into 2018 as a result of increasing demand.
At two recent property forums hosted by Carter Jonas, rising above the usual and much debated challenges associated with a city like Oxford, there was much discussion about the County’s strength, depth and opportunities going forward, particularly within the Life Science sector. Talk of the County being on the cusp of exciting economic growth for once does not seem unfounded when taken in context of the activity figures shown, the significant increase of investment into University Spin outs and the growing sense of belief in the County.
In the short to medium term we expect announcements about the Oxford North, Oxpens and Osney Mead schemes as well as further transactional activity to cement our views and we very much hope that this current sense of optimism prevails.