Commercial
EDGE
Strong quarter for office/lab leasing in Oxford
Contact us
OXFORDSHIRE
EMAIL WILL
Partner
Will Rooke
CAMBRIDGE
EMAIL CAROLINE
Partner
Caroline Penn-Smith
BIRMINGHAM
EMAIL JON
Partner
Jon Silversides
OXFORD
EMAIL ANDREW
Partner
Andrew Hardwick
BRISTOL
EMAIL SCOTT
Partner
Scott Harkness
LONDON
EMAIL DANIEL
Daniel Francis
head of research
EMAIL PHILIP
Partner
Philip Marshall
EMAIL CHRIS
Associate Partner
Chris Hartnell
LEEDS
BATH
07899 081027
01223 326815
07342 067831
0121 306 0376
07720 537141
01865 404458
07771 820053
0117 363 5694
07860 360821
020 7518 3236
07801 666137
020 7518 3301
07767 820053
01225 747261
07800 572007
0113 203 1079
Prime headline city centre rents have surged year on year and are sitting at £49.50 psf, while rents for grade A laboratory-enabled space are heading towards £55.00 psf, as demand continues to increase and availability remains tight.
Office investment totalled £220 million in Q2 2022, up 260% quarter on quarter, up an impressive 555% year on year and the third highest quarter for office/lab investment on record. With a total of £280 million spent in H2 the year is course to exceed the 2021 total of £350 million. Competition for well-let office/lab assets over the past 12 months has pushed up pricing, with prime yields now sitting at circa 3%.
Office & Laboratory Take-Up
OFFICE & laboratory RENTS
office & laboratory INVESTMENT
Industrial leasing activity eased further in the second quarter. Take-up in Q2 2022 totalled 185,675 sq ft, down 22% quarter on quarter, 27% down the five-year quarterly average but 6% up year on year. A number of deals were completed during the quarter at Harwell Campus, Milton Park, Abingdon Business Park and Tungsten Park. A continuing theme is the use of sheds as labs/hybrid/R&D space in certain locations.
INdustrial TAKE UP
A notable lack of available stock is now evident across the market, and consequently, the upward pressure on rents continues with headline industrial rents in Oxfordshire now sitting at £12.00 psf. This excludes deals to R&D occupiers where rental levels of between £15.00 and £27.00 psf are now being witnessed.
INdustrial RENTS
Prime headline city centre rents
£49.50 psf
Industrial investment totalled £37 million in Q2 2022, down 52% quarter on quarter, 30% down on the five-year quarterly average but a notable increase from the £6 million spent in Q2 2021.
INdustrial inVESTMENT
In the standout deal for the quarter, NFU Mutual agreed to a £26.4 million forward funding deal for the speculative development of the final phase of Tungsten’s warehouse and industrial project at Downs Road in Witney. The three-building scheme will total 167,800 sq ft and is expected to be completed by early 2023.
OUTLOOK
Strong demand for lab space and the shift in preferences among occupiers for high-quality office space for which there is limited availability is likely to support steady rental growth in that segment.
Given the imbalance between supply and demand, industrial rents will continue to increase across all size ranges, due to the shortage of new stock coming through the development pipeline.
Oxford’s strong occupier base and low vacancy rate will continue to attract UK and overseas investors. However, given the current economic climate, rising costs and uncertainty, we are not expecting yields in both office and industrial sectors to shift back to peak levels, while buyers are likely to return with a more cautious view of genuine rental growth prospects.
National Overview
Bath
Bristol
Cambridge
Birmingham
Leeds
OxfordSHIRE
National Overview
Bath
Birmingham
Bristol
Cambridge
Leeds
OxfordSHIRE
National Overview
National Overview
Bath
Bath
Birmingham
Birmingham
Bristol
Bristol
Cambridge
Cambridge
Leeds
Leeds
OxfordSHIRE
OxfordSHIRE
Partner, Oxford
Jon Silversides
01865 404458 | EMAIL >
Daniel Francis
020 7518 3301 | EMAIL >
Head of Research
Associate Research Analyst
Rad Radev
020 7518 3270 | EMAIL >
Head of Commercial
Scott Harkness
020 7518 3236 | EMAIL >
Source: Carter Jonas
Source: Carter Jonas
Source: Carter Jonas
Source: Carter Jonas, Property Data, EGI, CoStar
Source: Carter Jonas
Source: Carter Jonas, Property Data, CoStar
The number of deals in the second quarter equated to 29, a notable increase from 17 in the previous quarter. From all the deals in Q2, three were above 10,000 sq ft, while 15 were below 5,000 sq ft.
Source: Carter Jonas
The standout deal of the quarter was Life Science REIT’s acquisition of Oxford Technology Park for £183 million in May. The deal includes the park and a £62.7m forward funding component to complete the OTP’s build-out.
Our analysis on the office and industrial market in Oxfordshire dives into the latest take up levels, rental trends and investment deals.
"Office and lab space leased in Q1 totalled 39,599 sq ft"
However, it should be noted that there is significant variation in both the differing quality and the approach of landlords to laboratory-enabled space and fitted space, with evidence of fitted lab space exceeding £100 per sq ft.
Industrial investment slowed in the second quarter
In the latter part of the quarter, Clipstone REIT purchased Marley Way Trade Park for £5.5 million, reflecting a net initial yield of 4.38%.
"Industrial investment totalled £37 million in Q2 2022"
Source: Carter Jonas
Head of Commercial
Scott Harkness
020 7518 3236 | EMAIL >
Head of Research
Daniel Francis
020 7518 3301 | EMAIL >
Associate Research Analyst
Rad Radev
020 7518 3270 | EMAIL >
Q2 2022
Oxfordshire’s office and lab take-up surged in the second quarter of the year, supported by several companies expanding their footprint. Office and lab space leased in Q2 totalled 167,317 sq ft, up 127% quarter on quarter, 96% above the five-year quarterly average and the strongest quarter for take-up since Q2 2017.
Notable deals of the quarter include Exscientia, which expanded its presence with an additional 37,000 sq ft, and Oxgene taking 8,411 sq ft. Both lettings were within two buildings at The Oxford Science Park. Several spaces in Milton Park and Oxford Technology Park are also under offer, which could usher in a strong second half for office take-up.
There is now a significant range in incentive packages, although typical city centre rent-free periods are limited to circa 0.5 months per year term certain. While, out of town lab space has a higher headline rent than city centre, it is still less expensive on a net effective (10-yr) basis, but the gap is narrowing.
Investors continue to target Oxford office and lab assets
Notable deals during the first quarter include Evolito taking 6,121 sq ft at Langford Business Park and Whittards leasing 5,635 sq ft at Milton Park. Several spaces in Milton Park and Oxford Technology Park are also under offer, which could usher in a strong second quarter for office take-up.
Oxfordshire’s office and lab take-up surged in the second quarter of the year, supported by several companies expanding their footprint. Office and lab space leased in Q2 totalled 167,317 sq ft, up 127% quarter on quarter, 96% above the five-year quarterly average and the strongest quarter for take-up since Q2 2017..
There is now a significant range in incentive packages, although typical city centre rent-free periods are limited to circa 0.5 months per year term certain. While, out of town lab space has a higher headline rent than city centre, it is still less expensive on a net effective (10-yr) basis, but the gap is narrowing.
Strong quarter for office/lab leasing in Oxford.
The standout deal of the quarter was Life Science REIT’s acquisition of Oxford Technology Park for £183 million in May. The deal includes the park and a £62.7m forward funding component to complete the OTP’s build-out.