Demand for labs exceeds offices for first time in Arc region

Bidwells has identified a shift in real estate requirements across the OxCam Arc over the past year. In its most recent Offices & Labs Databook report, the consultancy has highlighted that, for the first time on record, laboratory demand in both Oxford and Cambridge (pictured) has exceeded the demand for offices. Overall, Bidwells has calculated 1.8m sq ft of office demand and 1.9m sq ft of lab demand currently outstanding across the Arc markets. In Oxford alone, Bidwells estimates around 840,000 sq ft of lab space requirement currently outstanding on the market. Rob Beatson, partner at Bidwells, said: “Traditionally, demand has been driven by companies from Oxfordshire growing and expanding, but we’re now seeing more and more requirements coming through both nationally and globally – including a number of US requirements, which indicates that the Oxfordshire cluster has reached a scale and a maturity that people want to be part of it.” In January alone, Bidwells tracked £250m of venture capital investment raised by Oxfordshire-based start-ups and early-stage companies, which the consultancy estimates to lead to further life sciences-related real estate requirements of up to 2m sq ft by 2027. The report has also highlighted a shift in the size of office and labs requirements across the Arc region, with 71% of all lab space requirements standing above 30,000 sq ft compared with just 28% of occupiers on the market seeking a similarly sized office space. Turning to supply, office availability in the region stands at around 9.5% below the demand figure. For labs, there is a mere 35,000 sq ft of ready-to-occupy space available in Oxford, and none in Cambridge. Shortages of stock have driven acceleration in rents, with Bidwells quoting £55 per sq ft in Oxford and £56 per sq ft in Cambridge for offices, while prices for fully-fitted lab space in Oxford stand at £75 per sq ft and £58.5 per sq ft in Cambridge. Sue Foxley, research director at Bidwells, said: “We are expecting to see a bit of a moderation between those two markets over the next few years as more supply comes on.” Max Bryan, partner at Bidwells, added: “We are expecting rents to rise strongly both in Cambridge city centre with the new office schemes coming online, but also with the lab schemes delivering purpose-built R&D space rather than conversions which are not able to move forward the rents. “We are very positive for 2023 with a robust occupier demand that we are recording.” To send feedback, e-mail evelina.grecenko@eg.co.uk or tweet @gre_eve Image © Andrew Sharpe/Shutterstock