According to Savills, take-up in the Cambridge office market has been characterised by a number of sub 10,000 sq ft deals (929 sq m) in the second half of 2017, with tech occupiers accounting for 42% of overall leasing activity.
The second half of the year to date has seen only five deals exceeding 10,000 sq ft (929 sq m), including PWC’s pre-let of 12,195 sq ft (1,132 sq m) at the Maurice Wilkes Building on St John’s Innovation Park. Savills notes that whilst deals this year have been largely dominated by small start-up firms moving into second and third phase growth stages, the first half of 2017 also saw a number of corporate occupiers including Amazon, Heptares and Astex Pharmaceuticals commit to more than 130,000 sq ft (12,077 sq m) of office and lab space across the city.
As a result, Savills research shows that in Cambridge’s key tech cluster, located in the city centre, only 23,832 sq ft (2,214 sq m) of space remains available in the sub 10,000 sq ft (929 sq m) size bracket. Furthermore, the parks are seeing similar strains on supply with circa 50,000 sq ft (4,645 sq m) of vacant existing office accommodation across the northern cluster of varying grade.
William Clarke, associate director in the business space team at Savills Cambridge, comments: “Despite there being more than 160,000 sq ft of speculative office space under construction at 50 and 60 Station Road in the city centre, this is not due to complete until 2019. In the interim, a lack of existing opportunities within the northern cluster and city centre means that we will need to find creative solutions in order to deliver the space that businesses from corporates to start-ups might need.”
Consequently, the lack of stock, coupled with strong ongoing occupier demand is likely to drive up rents in Cambridge city centre. Savills predicts that rents in this location will continue to strengthen during 2018 as they edge closer to £40.00 per sq ft (£430 per sq m).
William adds: “Whilst the city will always attract household names due to its status as a key global business location, there is a danger that its start-up community will find it harder to spread their wings, stifled by a lack of suitable space, both in the beginning and as they continue to grow. For this reason, Cambridge needs to provide a spectrum of available space, along with the necessary infrastructure to nurture home-grown talent.”