The VSL INTEL commercial property report shows that 2019 was a year of industrial speculative development for Oxfordshire with the largest supply of new speculative stock coming to the market in history.
A total of 375,000 sq ft of industrial speculative stock is recorded which has led to an increase in supply by 64% to 1,360,000 sq ft, up from 828,000 sq ft in 2018.
Conversely, the supply of office space has remained static and there is little speculative development coming forward in the next year so existing refurbished stock will continue to support the market.
The 2019 VSL INTEL figures show a confusing picture as take-up for office and industrial space dropped, although rents kept climbing. The uncertainty of Brexit is partly to blame for the dampening of take-up figures but this was tempered by a buoyant feeling in the market due to the number of successful spin-out companies starting and flourishing in Oxford.
Transactions across the office and industrial market have fallen significantly since the highest levels recorded two years ago. A total of 28 office transactions were recorded compared with 52 in 2017, while 35 industrial transactions took place compared with 49 in 2017.
VSL director Tom Barton explained: “Further speculative industrial supply is forecast for 2020 and we predict 2020 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 reflects investor and developer confidence in the Oxfordshire market.
“The delivery of new stock will be focused almost entirely around the towns of Bicester (230,000 sq ft), Didcot (310,000 sq ft) and Witney (164,000 sq ft) where land has been released via a well planned local authority planning framework.”
Richard Venables, director at VSL, explained: “The domination of demand experienced in recent years from the science and technology sector has waned slightly this year. This sector still accounts for 63% (70% in 2018) of office take-up but has sunk to only 26% (64% in 2018) of the industrial market.
“Our records don’t take into account the smaller lettings and there is a strong feeling that spinout activity continues to be positive with OSI plc ready to fund the intellectual property emanating from the universities.
“We believe that this market will bounce back in 2020 as the upsurge in start-up companies recorded in recent years mature with second and third-round funding leading to new property requirements.”
The VSL Intel annual report provides 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 2019 report features an interview with Peter Wilder, head of property for Oxford Sciences Innovation plc(OSI) about its ambitions and his forecasts for the future property needs for the spinout companies.
In 2019 VSL was named as Oxfordshire’s most active agent and dealmaker of the year for the 11th year by Estates Gazette Interactive (EGi). VSL transacted 14 offices deals equating to 56% of total take-up and 19 industrial deals equating to 60% of the total market take-up in 2019.