With office space demand from fast-growing Oxford University spin-out businesses pushing prime office rents in Oxford up by 16.7% in a year, Bidwells says the next big challenge is for the property market to keep up with the knowledge-based science and tech industries.
The leading property consultants look twice yearly at the office market in the Oxfordshire region and its latest research findings – released in July – highlight an unsatisfied demand for offices in Oxford’s city centre.
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Rents hit £35 per square foot in the first half of 2018 with demand for office floor space now at record levels, with 1.2m sq. ft of requirements from 68 registered occupiers. Bidwells is predicting prime rents will hit £40 per sq. ft by 2020.
Between 2016 and 2017 the office and lab floorspace absorbed by knowledge-based industries in Oxfordshire rose, Bidwells estimates, by 142%. Based on activity during the first half of 2018, Bidwells believe there may be a further 60% rise this year.
Sue Foxley, Research Director at Bidwells, said: “While the university continues supply both super skilled labour and new businesses, the challenge will be for the property market to keep pace.
“This acceleration is understandable given the presence of the university and the implications for the local labour market and business ecosystem. With 12% (ONS, 2016) of jobs in the professional, scientific and technical activities, and over half the population qualified to degree level or above, Oxford is well ahead of the south east average in technical and scientific capability.”
Foxley added: “Apple became the first trillion-dollar company last month. The fact only tech companies were in the running for this twelve-digit title exemplified the fundamental change in the drivers of economic growth since the turn of the century.
Oxford University Innovation, the organisation managing the University’s technology transfer and consulting activities, expect to see 500 extra jobs per annum created each year until 2025, with spin out companies occupying at least 350,000 sq. ft of office and laboratory space by then.
Foxley added: “The proximity of tech and scientific business with the financiers and professional services support a thriving economic ecosystem. This is evident in the overall take-up activity during the first half of 2018, which by July was already two thirds of that seen in 2017 as a whole.
“This is not to say traditional sectors such as financial and business services are not also expanding in the city; combined they took 20% more floorspace in 2017 than in 2016. Businesses in these sectors are essential ingredients for an innovative cluster, whether on campuses such as Harwell or in Oxford city centre.”
The University of Oxford contributes £5.8 billion to the UK economy, generating more technology spin outs than any other UK University and producing more start-ups valued in excess of $1 billion, more than any other university in Europe over the past decade.
Over 80% of Bidwells’ work is concentrated in the ‘Golden Triangle’ of Oxford, Cambridge and London.
To view Bidwells’ most recent Oxford business space research please visit: https://www.bidwells.co.uk/insights-and-research/our-view-on-oxfordshire-offices-and-labs-summer-2018/