Office and lab take-up by science and technology firms in Cambridge and Oxford at record high

Signs of recovery in Venture Capital funding is expected to drive increased demand from science and technology occupiers over the next few years, the firm reports.

Bidwells finds that both the Oxford and Cambridge office markets enjoyed a relatively strong start to the year, bucking the decline in demand seen in other UK cities.

Office take-up in the two cities totalled 335,000 sq ft in the first half of 2024, an increase of 17 per cent on the corresponding six months of 2023. Although some occupiers in Oxford and Cambridge have downsized as they have switched to hybrid working, this has been more than offset by the growth of science and tech businesses.

Tech hardware companies have been particularly active so far this year, reflecting the growth in AI and data centres, and tech and science firms accounted for 94 per cent of take-up across the two cities in the first half of 2024.

The laboratory markets in Oxford and Cambridge were quieter in the first half of 2024, but Bidwells expects an uptick in the second half of this year. Venture capital funding has started to recover after a hiatus in 2023 and this should feed through to an increase in lab demand from university start-ups and scale ups, the firm believes.

Bidwells adds that there has recently been a pick-up in interest from big pharma companies, reviving lab requirements which were previously on hold.

By the end of 2029, Bidwells forecasts rents for prime labs in Oxford will be 18 per cent higher and prime office rents up 23 per cent. Cambridge is expected to see similar levels of growth of 30 per cent and 26 per cent, respectively, over the same period.

There are signs that the investment markets in Oxford and Cambridge are staring to thaw. A number of deals which had stalled in 2023 have started to progress and investors are once again considering re-development opportunities, as well as prime offices and labs.

In part this reflects the re-pricing of assets since mid-2022 and in part the recent fall in debt costs as financial markets anticipate that the Bank of England will cut interest rates later this year.

Max Bryan, Partner, Head of Science and Technology at Bidwells, said: “The Cambridge market is at a turning point. The improvement in global Venture Capital sentiment is being seen in greater levels of occupier interest which we expect to translate into strengthened take up in the second half of the year.

“The strength of Cambridge’s homegrown companies will remain crucial to the market’s long-term health, delivering a broad and deep occupier base. The strength of Cambridge’s occupier base has led many developers to press ahead with schemes despite the challenging economic backdrop observable over the last two years, which signifies the conviction in the investment rationale for science and technology-enabled real estate in Cambridge.”