Oxfordshire: Exceptional demand for offices reported by LSH

Oxford and South Oxfordshire was the only office market within the Thames Valley to outperform its long-term average in both 2016 and H1 2017, according to Lambert Smith Hampton’s 2017 Thames Valley Office Market Report.

Take-up across Oxford and South Oxfordshire remained solid throughout 2016 at 258,000 sq ft, just 5% below the previous year’s total of 272,000 sq ft and 10% above the 10-year average of 234,000 sq ft, LSH said.

2016’s major transactions (both out of town) were a 45,000 sq ft pre-let to AC Nielsen by Goodman at Oxford Business Park and a 42,000 sq ft pre-let by MEPC to a confidential occupier at Milton Park.

The LSH Oxford team has also seen strong take-up in H1. Director Kevin Wood said: “We’re seeing exceptional demand, led by the robust investment in the region’s knowledge economy. H1 take-up was 238,674 sq ft – only just below the 10-year average for a whole year. 10 of 13 transactions comprised occupiers from the science and technology sectors. Of those 10, nine are expanding businesses and nine were science park deals.

“The majority of transactions have been completed by expanding home-grown occupiers, with few relocations from outside of Oxfordshire. This, combined with the burgeoning science and technology sector, has largely insulated this market from the uncertainty caused by the EU referendum which has affected so many other Thames Valley areas.”

At 505,000 sq ft, supply is 8% down on 2016’s three-year-high of 548,000 sq ft. However, it remains significantly higher than it was in 2014 (464,000 sq ft) and 2015 (398,000 sq ft).

This is being driven by the speculative development of space on the three main science parks – Harwell Campus, Milton Park and Oxford Science Park.

At 7%, Oxford and South Oxfordshire has the second lowest availability rate in the Thames Valley. The shortage is most acute in Oxford city centre, with no new supply expected here.

LSH said 2017 has seen rents of £27.50 per sq ft achieved in the town centre. Out-of-town, Harwell and Milton Park’s new space is set to achieve £32 per sq ft.

Source: CoStar