Oxfordshire: Critical supply shortage holding back tech and industrial market
The VSL & Partners' commercial property market report shows 2016 was a record year for the industrial market but with stock at the lowest ever recorded levels, this could stifle growth prospects for some businesses in the year ahead.
Last year the Oxfordshire industrial and technology market had one of its best years ever, defying the instability caused by the Brexit referendum. The year provided the best take up levels in a decade and generated strong rental growth which was particularly impressive within the science and technology sectors.
Take up at the end of 2016 reached 1,070,000 sq ft, the first time the million square foot barrier has been breached since 2006, representing a 38% increase in take up over the five-year average. Didcot was the main driver of transactional activity during the year with Bicester in a close second. The two towns recorded over 50% of the total take up during the year.
Tom Barton, director at VSL, explained: “Industrial supply has reached unprecedented low levels and at the end of 2016 total supply was almost identical to the previous year’s take up. With little hope of any new meaningful supply coming to the market during 2017, further rental growth is likely and the land release of smaller commercial plots will be key to meeting the projected growth of occupiers in the near future.
“Conversely, supply in the office market increased by 12% in 2016, not through new speculative building but through the release of buildings mainly to the east side of Oxford by larger corporates due to relocation or consolidation. Take-up levels declined by 10% in comparison with 2014 and 2015, although they still sit above the five-year average. Office rents started to climb significantly in 2016 with Grade A rents at £27.50 per sq ft and new quoting rentals reaching £30 per sq ft,” said Richard Venables, director at VSL & Partners.
In the investment market Oxfordshire, and Oxford in particular, remain on a wish list for most institutions and property funds underpinned by the area’s strong economic fundamentals.
The VSL 2017 market report provides an analysis of the office and industrial market for 2016 focusing on central Oxford and along the A34 ‘Innovation Knowledge Corridor’. It gives clear insight into supply, take-up and rents and details forecasts for the year ahead. It also puts a spotlight on the investment and flexible office markets, together with the continuing development of Bicester with its ‘Garden City’ status.
