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A Look Back
During the last 18 months, Oxford has faced significant supply constraints like the other two 'Golden Triangle' markets. Rents for labs are now in the mid £ 60's and office rents in the city centre are set to reach similar heights if a new product is developed. There remains a lack of quality stock within the town centre, with most of the 2022 and 2023 Q1 activity occurring in out-of-town locations.
The supply constraints led to reduced take-up levels in 2022; this has continued in Q1 2023, where 64,574 Sq Ft transacted, split almost equally between Labs and offices. Whilst take-up levels are inconsistent with market sentiment in Oxford, the transactions illustrate the market dynamics - new record rents and diminishing rent-free periods have been offered compared to other Southeast markets.
Demand levels remained healthy in Q1 2023, with a total of 904,500 sq ft over 26 requirements. The core demand derives from Life Science occupiers with 687,000 sq ft laboratory space being sought.
A Look Forward
Landlords are reacting to this supply imbalance. Knight Frank is aware of 38 schemes either proposed or under construction in Oxford's long-term development pipeline that totals just over 10m sq ft. Only five of these schemes are dedicated offices, delivering 495,000 sq ft split equally between the town centre and out-of-town markets. Supply will remain restricted until 2025, when 750,000 sq ft is due to complete but spread across different submarkets - in and out of town.
The lack of supply has also driven the pre-let market, exemplified by the recent Moderna announcement, which will establish a UK presence on the Harwell Campus by committing to 145,000 sq ft of vaccine research and manufacturing space.