Bidwells Summer 2021 Oxfordshire report reveals that demand for office and laboratory space in Oxford has had an intense investor interest over the last two years. The previous six months have recently seen several significant opportunities brought forward, attracting both overseas capital and domestic funds. This demand has brought rents to a new high of £47.50psf in H1.
The availability rate for laboratories remains tight, with only 18,700 sq ft currently on the market, driving down the availability rate to 2.2%. It is anticipated this new capital will provide a boost to supply.
The office sector has seen a limited return of space to the market as some companies revisit occupational strategies, while others move to accommodate growth; the regional office availability rises to 9.7% as some more significant grade A space becomes available to the market.
Aside from London, Oxford has attracted the highest venture capital funding in the UK in the first six months of this year, raising a total of £1.37bn across 31 fundraising rounds. The most prominent venture capital raising was by Exscientia ($225m, with an additional $300m equity commitment). The group uses artificial intelligence to speed up the delivery of new drugs.
The owner of Oxford Science Park (OSP) is looking for a strategic partner to accelerate the park’s development. OSP consists of 550,000 sq ft of office and laboratory floor space across 16 buildings. Although several assets have been sold to investors and occupiers, there is potential to develop further.
Oxford’s knowledge-based economy has boomed in recent years, with output growing by 7.1% in 2019 and 4.5% per annum in 2016-19. This compares with growth for the UK, which stands at 4.5% and 4.3% respectively.
The largest transaction in the year to date was the European R&D real estate specialists Kadans Science Partner’s purchase of the 28,000 sq ft Sherard Building at Oxford Science Park for £25.5m (NIY 3.62%).
“Turnover in the Oxford office and laboratory investment market saw a sharp upturn, with a total of £61.7m of deals completing in H1 2021, across five transactions. This compares to £89m of activity in the previous 12 months in six deals. The second half of the year is expected to see activity increase with several larger transactions currently in negotiation.”
Sue Foxley, Research Director at Bidwells.