Market snapshot

Office Market Pulse Cambridge Q3 2014

Agents in Cambridge have been warning of a desperate shortage of office stock for some time. Unlike other parts of the UK where shortage has been a result of residential conversions, Cambridge is seeing a shortage due to continued strength in demand. Developers are responding with notable speculative schemes both in the city centre and out of town, but the concern is that these have come too late to cope with growing demand. The lowest quarterly take-up figures since Q2 2011, coupled with an increase in registered demand, indicate a lack of the space available that occupiers want, rather than a lack of interest.

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In this issue:

Office take-up is falling, demand is rising

  • During Q3, Cambridge saw 58,523 sq ft of take-up, the lowest quarterly figure since Q2 2011. Total take-up for 2014 is now at 298,966 sq ft, which is only 58% of the city’s five year take-up average and is less than half of the 622,544 sq ft recorded at this point last year.
  • Since Q2, the average transaction size has fallen from 6,165 sq ft to 5,067 sq ft.
  • In the first three quarters of 2014, 80% of take-up has occurred away from the city centre where supply is limited. 71% of all transactions have involved Technology, Media and Telecommunications (TMT) and Pharmaceutical occupiers who continue to play a dominant part in Cambridge’s local economy.
  • For the second consecutive quarter, there has been an increase in registered demand with Q3 seeing a 14% uplift on Q2 demand. Registered demand equates to 178% of current built stock availability.
  • Rental levels and incentives remained robust throughout Q3 with indications of continued increases in rents in secondary locations and evidence of a continued contraction in incentives.

Limited availability, particularly in the town centre

  • Availability has fallen by approximately 5% to 692,753 sq ft. Of this, only 13.8% is in-town space and 6.8% of genuine grade A quality.
  • There are no buildings readily available in town offering greater than 20,000 sq ft and only four options available in the wider market place.
  • Grade A and B space has attracted 77% of take-up to date in 2014. However, 51% of available space is of grade C quality.

Key transactions, Q3 2014

Property Size (sq ft) Landlord(s) Tenant Lease information
St Andrews House, St Andrews Road, Chesterton, Cambridge 13,980 Orchard Street Investment Management Ubisense

10 year lease with TBO after. Rent £22.50 per sq ft predicated on Landlord's Category A refurbishment works

Harston Mill, Harston

6,600 Sagentia Linaro 3 year lease. Rent £21.00 per sq ft

Shaftsbury Building, Shaftsbury Road, Cambridge

5,220 Private investor Stephen Perse Foundation

15 year lease with stepped rent equating to £20.11 per sq ft



Regional transaction volumes outstrip those in London

Our latest UK Investment Transactions (UKIT) report has found that in Q3 2014, quarterly investment volumes reached £16.3bn, the highest since Q4 2013 and above the five year average of £9.4bn. For the first time since Q1 2011, the volume of single asset regional transactions is also greater than those for property located in London. When you consider the number of regional portfolio deals transacted in Q3, the ratio of regional to London investment is almost 2:1.

Click to find out more about our latest UK Investment Transactions (UKIT) report here.


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