Richard Venables, left, with Peter Wilder, head of propety for OSI.

Take-up of office and industrial property space is down but rents are still going up, says new report

 3 mins | By Gill Oliver
 | Work spaces | Jan 27th 2020

Take-up for office and industrial property space fell in Oxfordshire last year but rents kept climbing, creating ‘a confusing picture’ according to a new report. 

Brexit-related uncertainty was partly to blame for the decrease in take-up, says VSL’s newly published INTEL commercial property report. However, the Kidlington-based property agent says this was tempered by ‘a buoyant feeling in the market’, thanks to the number of successful university spin-out companies starting and flourishing in Oxford.

Half the number of transactions across the office and industrial market took place last year, compared to two years earlier. Just 28 office transactions were recorded in 2019, versus 52 in 2017. And 35 industrial transactions took place last year, in contrast to 49 in 2017.

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On a more optimistic note, VSL’s research shows the Oxfordshire commercial property market saw its largest ever supply of new speculative industrial development last year.

A total of 375,000 sq ft of industrial speculative stock was recorded in 2019, boosting supply by 64 per cent to 1.36 million sq ft.

In contrast, the supply of office space remained static, with little speculative development in the pipeline, meaning existing refurbished stock will stay in the spotlight.

VSL director Tom Barton explains: “Further speculative industrial supply is forecast for 2020 and we predict the year will be a new record for stock delivered to the market, providing a further 700,000 sq ft. 

“This will dwarf the level of stock delivered in 2019 and reinforces investor and developer confidence in the Oxfordshire market.” 

Barton predicts new industrial stock this year will focus in and around the market towns of Bicester (230,000 sq ft), Didcot (310,000 sq ft) and Witney (164,000 sq ft), where land has been released via what he describes as “a well-planned local authority planning framework”.

Demand from the science and technology sector, which has dominated the county’s commercial property landscape in recent years, has waned slightly, according to VSL director Richard Venables.

The science and tech sector still accounted for 63 per cent of office take-up last year, compared to 70 per cent in 2018.

But take-up from science and tech businesses in the industrial market dipped to 26 per cent last year, in sharp contrast to 64 per cent in 2018. 

“Our records don’t take into account the smaller lettings and there is a strong feeling that spin-out activity continues to be positive, with OSI plc ready to fund the intellectual property emanating from the universities,” Venables explains. 

“We believe that this market will bounce back in 2020 as the upswell in start-up companies recorded in recent years mature with second- and third-round funding leading to new property requirements,” he adds.

VSL’s new report points to a number of reasons for optimism in the Oxford commercial property market, including:

  • Oxfordshire Local Enterprise Partnership’s Local Industrial Strategy, which was launched in September last year. This predicts that by 2040 Oxfordshire’s GVA will have doubled to £46bn per year. It believes key transformative technologies – digital health; space-led data applications; autonomous vehicles and quantum computing – could add £180bn to the UK economy.
  • Legal & General’s decision to invest £4bn over the next decade, in a partnership with Oxford University. The funding will deliver a series of projects for the University, including the creation of science and innovation districts with workspace and research facilities plus new homes for staff and students, subject to planning.
  • In December, Oxford City Council approved the Oxford North Plan, an innovation district expected to provide 4,500 new jobs in almost one million sq ft and 480 new homes, of which 168 will be affordable. The development will also include shops, bars, restaurants and workspace for start-ups. 

VSL’s Intel annual report is an analysis of the office and industrial market focusing on central Oxford and the A34 Innovation Knowledge Corridor for offices from 3,000 sq ft and above and industrial from 5,000 sq ft and above. The full report can be read here

Looking for somewhere to base your business? Check out our directory of Oxfordshire workspaces. More than 80 are listed including co-working spaces, offices and serviced offices, science parks, innovation centres, industrial parks, creative studios and more.

About the Author

Gill Oliver

Gill Oliver is a professionally trained journalist who’s written for The New Statesman, The Bureau for Investigative Journalism, The Daily Mail’s business section This is Money, The Press Association, The Huffington Post plus a host of national magazines, news agencies and trade and industry journals. She’s also spent nine years reporting on the Oxfordshire business and tech scene for The Oxford Times and The Oxford Mail.

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