Take-up of office and lab space in Cambridge fell by up to 35% last year, according to data from Savills. Although take-up increased by more than 120,000 sq ft in the final quarter of 2022 compared with the previous quarter, the annual take-up figure fell due largely to the lack of available stock.
In Q4, take-up hit 185,564 sq ft, of which 151,000 sq ft was office space and just under 15,000 sq ft was lab accommodation. Vacancy rates for labs currently stand at 0.57%, with just 15,000 sq ft of fitted space available, although 11,518 sq ft of this space is under offer.
The supply demand imbalance will not be addressed any time soon with the only new lab space due to be delivered in 2023 being at The Howard Group’s Unity Campus, where 88,000 sq ft is under construction.
Due to the lack of supply of office and lab space in Cambridge Savills predicts headline rents will exceed £60/sq ft for prime city centre office space and more than £60/sq ft for fitted labs on well-established science parks.
Mark Taylor, head of commercial at Savills Cambridge, said: “2022 did see a drop in activity across Cambridge, but this can be attributed to the ongoing lack of supply. Occupationally, we are still seeing the global trend of a flight to quality, but with limited availability of premium space requirements are being left unsatisfied and in some cases businesses have had to compromise by taking lower grade stock.
“This presents an opportunity for landlords who will need to look at both the refurbishment of existing buildings and the conversion of offices to laboratory accommodation to benefit from speed to market. Those willing to speculatively build fitted lab space will likely be successful, especially if delivered in 2023. With most Cambridge occupiers being in the innovation sector, requirements are driven by organic growth, usually on a much shorter timeline.”
Emma Morton, director in the Savills occupier services team, added: “Occupiers are taking a fresh look at the role and purpose of their office space and are becoming increasingly discerning when it comes to making real estate choices. Driving these decisions is a need to support hybrid working policies, create an inclusive workspace, the ability to fulfil ESG requirements, all whilst reducing running costs. However, current market conditions in Cambridge are such that it is essential to start early when reviewing workplace strategy and property requirements in order to satisfy these demands.”
