An overview of the commercial property market in Cambridge

In general terms, the commercial property market in Cambridge is characterised by a positive outlook. The most recent statistics released point at an upward trend in terms of commercial property take-up rates, particularly over the past two years. According to recent surveys, this trend is especially evident in the office property market, which has seen unprecedented growth since 2011.

During the past year, the combined amount of commercial floor space taken up in Cambridge totalled 900,000 square feet. This figure represents a 25 per cent increase over the previous year's take-up rates. Market analysts attribute these levels of growth to an unusually high number of large commercial property transactions, whose volume has ranged between 30,000 and 52,000 square feet.

Economic sectors like scientific research and development, biotechnology, and medical/pharmaceutical research are particularly strong in Cambridge. This fact contributes to the healthy outlook of the commercial property market in the area, as there is a number of dedicated business parks that cater to businesses involved in these fields. Some of the most in-demand commercial property locations are:

Cambridge Science Park - A development that offers 1.65 million square feet of office and laboratory space.

Cambridge Research Park - This park provides 600,000 square feet of premium office space at prices that start at £18 per square foot.

Cambridge Retail Park - This site offers 238,000 square feet of retail space. Future expansion is being discussed.

Grand Arcade - Since its inauguration in 2009, this shopping centre has become one of East Anglia's main retail hubs, featuring 37,500 square feet of retail floor space.

As for future predictions, researchers highlight the need of a rapid onset of pre-letting activity. Otherwise, the growth of the local commercial property market could stagnate.

Office space in Cambridge

During the past two years, the office property market in Cambridge has been one of the best performing in the United Kingdom. Take-up rates for 2011 were calculated at an impressive 495,000 square feet, 75 per cent higher than during 2010. The majority of transactions were for units whose size ranged between 5,000 and 10,000 square feet.

The limited availability of Grade A office space at most of Cambridge's premium locations, coupled with increased demand from large multinationals, have meant that prime rents reached £30 per square foot. Meanwhile, headline rents at the city's numerous business parks average £26.50 per square foot. The availability of Grade B office space has also experienced a decrease, and is currently 37 per cent lower than it was in 2011. Rates for Grade B office space in the city centre range between £26 and £28 per square foot. Because of low availability rates in the city centre, most transactions for office floor space during 2012 were related to properties in Zone 3, located between the city centre and the most popular business parks.

In terms of future development, there are more than 4 million square foot of office space with planning consent, most of which involve extensions on current floor space at the city's business parks. However, speculative developments for office space are virtually inexistent.

Retail space in Cambridge

According to figures released by the local city council, during the first half of 2012 there were more than 33,000 square feet of retail floor space under construction in Cambridge. Over the past ten years, retail development projects have been plentiful in the area, especially in out of town locations, such as the Cambridge Retail Park and the Beehive Centre.

Currently, there are 93,000 square feet of retail floor space in the city centre and an additional 54,000 in out of town locations. Availability levels were estimated at 3.8 per cent. In terms of rental values, it seems that costs have stabilised after a few unstable quarters. Current rental values stand at £230 per square foot, and it is believed that prices could increase 2.6 per cent every year up to 2017.

Industrial space in Cambridge

Overall, take-up rates and demand for industrial floor space in Cambridge have experienced a slight decrease over the past couple of years, with the exception of laboratory space, whose take-up rates have increase threefold since 2010 and are currently in the region of 170,000 square feet. Currently, take-up rates for industrial floor space are 250,000 square feet, 20 per cent lower than in 2010, when they reached a record high of over 300,000 square feet.

The current trend in the industrial property market in Cambridge is the result of reduced demand and a relative lack of good quality industrial floor space. In terms of investment, things look a bit brighter, as some recent transactions (like the sale of Cambridge's 77,000 square feet Beadle Trading Estate) reflect net yields of up to 10 per cent.