The largest cluster of pharmaceutical businesses within the Thames Valley occurs in the Oxfordshire area between the M4 and Oxford, principally off the A34 corridor.
There are over 9,040 jobs and circa 265 establishments in this area. Within this important Thames Valley business sector, the next largest cluster occurs in the Maidenhead and Marlow area which boasts over 7,630 jobs and c140 establishments.
The profile of pharmaceutical businesses in these locations varies. Oxfordshire is very weighted towards research and experimental development on natural sciences and engineering (7335 of the 9,040 jobs) while in Maidenhead the emphasis is much more upon wholesale of pharmaceutical goods (4,800 of 7630 jobs).
The location strategy of these organisations will be dictated to a large degree by the access to Heathrow (many businesses in this sector have global business links) and access to the knowledge base implicit with Oxford University.
In the Oxfordshire area there has been a marked increase in this sector’s activity within the office market.
In 2015, 55% of office take-up (transactions by sq ft) was related to this sector. In 2016 this softened slightly to 44% but in 2017 there was a marked increase to 80%. At the end of Q1 2018 the sector’s share of office take up was 75%.
This demand might be related to the increased capital funding activity and the increased commercialisation of Oxford University. As an example, in 2017/18 Oxford Nanopore Technologies announced £100 million of new funding from global investors. They then acquired the freehold of the 55,000 sq ft Danby Building on Oxford Science Park then agreed a pre-let of a new 35,000 sq ft manufacturing and research centre at Harwell Campus.
The opportunity for landlords is to have the available stock ready to capture this demand but also the development and expansion land required to match bespoke R&D and manufacturing requirements. Harwell Campus is a case in point with a total of 5.5m sq ft of planned development.
The emergence of speculative development over the past three to four years has driven significant rental growth. The speculative development of Grade A office space, which can be adapted to laboratories, at Oxford Science Park, Harwell Campus and Milton Park has seen prime rents rise by 42% from 2014 to 2018.
Lsh research – Thames Valley pharmaceutical (incl biotech and med tech) business spread (jobs) including location quotient growth 2018/21
2014 – £22.50
2015 – £26.50
2016 – £27.00
2017 – £32.00
2018 (to Q1) – £32.00
As a footnote, £36.00 per sq ft has already been achieved at Quad One, Harwell Campus albeit on a comparatively small letting but it is anticipated that rents will stabilise at the mid-£30’s through 2018.
Kevin Wood the head of Lambert Smith Hampton’s (LSH) Oxford office said: “The demand profile for Oxford and South Oxfordshire is extremely encouraging, with a surge of start-up science/tech occupiers raising funding and subsequently experiencing exponential growth in order to meet research requirements. A case in point is our clients PsiOxus Therapeutics, which grew from a small base of c2,500 sq ft to a new HQ of 23,000 sq ft in approximately 12 months. The key now is ensuring that available stock matches growing demand.”
In the Maidenhead and Marlow area Cliff Jackson the head of office agency at LSH expanded new Maidenhead office, has been providing corporate real estate advice to the likes of Biogen and Amicus Therapeutics. He highlights the supply side challenges for occupiers. Grade A office supply is now at an almost acute level with 1.2 years supply of Grade A supply available.
The forthcoming Lambert Smith Hampton 2018 Thames Valley office report, to be published in May 2018, will include a detailed analysis of the region’s important, active, sectors in the office market, including their geographical spread, as well the distribution of the talent pool, in this important regional market.