The Cambridge property market has remained resilient during 2020 with take-up reaching 127,577 sq ft (11,852 sq m) in the first half of the year and over 100,000 sq ft (9,290 sq m) transacted during the course of Q3. Whilst there is expected to be an annual decline on last year’s figures, largely due to the Covid-19 pandemic, activity has resumed post lockdown from both occupiers and investors.
Key occupational deals in Q3 include Mantle Estates taking 29,000 sq ft (2,964 sq m) on Hills Road in Cambridge city centre, which will see the firm move and expand its CB1 business centre. In addition, Sure Petcare has agreed to take 15,000 sq ft (1,393 sq m) at Cambourne Business Park and Citrix has committed to a further 14,700 sq ft (1,366 sq m) on Cambridge Science Park, whilst Alchemie Technology has taken 16,319 sq ft (1,516 sq m) of office and mid-tech space at Duxford. Meanwhile Grifols and Biochrom have also committed to a total of 25,000 sq ft (2,322 sq m) of office and mid-tech space at Cambridge Research Park.
Following a particularly strong year of laboratory take up in 2019, to date there has been just 29,056 sq ft (2,699 sq m) of space transacted. This is predominantly driven by a dearth of available supply, which stands at just under 2%. Office stock also remains constrained, with just 12,593 sq ft (1,169 sq m) of Grade A space remaining in the city centre as of the end of Q2.
Savills notes that the development pipeline of properties currently under construction, or those capable of moving into this phase within the next six months, totals circa 453,000 sq ft (42,085 sq m). However, approximately 60% is either pre-let or under offer.
Using the level of existing office and laboratory space, which sits at circa 664,163 sq ft (61,702 sq m) across the whole market, and the five-year average take-up, Savills calculates that there is just 1.1 years of supply remaining.
Consequently, rents remain stable with prime headline rents within the city centre set to move closer to £50 per sq ft (£538 per sq m), whilst laboratory rents are now exceeding £40 per sq ft (£430 per sq m) for new build fitted product. Savills anticipates a flattening in the short-term as businesses get to grips with their future space requirements post lockdown, but the fundamentals remain in place to ensure the Cambridge market stays robust despite future uncertainty.
From an investment perspective, strong occupational activity has continued to attract investor interest. There were four transactions recorded in H1 2020, which totalled a combined £59 million. Notable deals included M&G Real Estate acquiring Clarendon House for £13.9 million, which reflected a 4.45% yield, with prime yields currently standing at 5%.
William Clarke, director in the business space team at Savills Cambridge, comments: “The first half of 2020 has undoubtedly been challenging and with the economic environment remaining uncertain, it is likely to remain that way. However, despite this, we have been buoyed by the continued resilience of Cambridge’s unique occupier profile, who have remained active undertaking a range of transactions throughout the period. The strength of the life science sector, in particular, has provided a steady foundation for the market and our expectation is that the delivery of prime quality product will continue to offer attractive options moving forward.”
