CAMBRIDGE SPRING 2020 - Carter Jonas
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CAMBRIDGE SPRING 2020
OUTLOOK DRIVERS OF Figure 1 Cambridge economic growth (GVA)
SUMMARY GROWTH
Source: Experian
Growth, % pa
4.5%
• O
ver the last five years, much • A
ccess to a highly skilled labour force
of which has been clouded by continues to be a key attraction for 4.0%
KEY ECONOMIC AND BUSINESS STATISTICS Cambridge and has contributed to
uncertainty across the UK, economic
Source: Experian, ONS, Land Registry, MHCLG, HESA phenomenal economic growth over the 3.5%
growth in Cambridge has been strong.
last 20 years. This, coupled with output
Increasing by 2.2% pa across the 3.0%
forecast to increase by 24% over the next
period, this rate outstripped the 2.1% CAMBRIDGE UK
10 years, reinforces why this resilient city
pa growth seen in Cambridgeshire 2.5%
Growth - next 10 years is attractive for residents and businesses.
and 1.7% pa increase across the UK.
Economic growth 24.0% 18.8% 2.0%
• In the city centre, transport infrastructure
• T
ake-up of office and laboratory Employment growth 6.8% 3.6%
1.5% 4.6% remains a key issue despite improved bus
Population growth
space improved in 2019, by close to a and train services. New Greater Anglia 1.5%
third on 2018, with a handful of large- trains have been introduced, providing
Earnings and affordability 1.0%
scale deals strengthening the figures. additional routes across the region.
Average house price, 2019 £437,288 £234,742
Availability levels decreased in 2019, Average house price growth, 2019 -2.7% 2.2% Consultation is underway for a proposed
0.5%
and stock in the CB1 area remains Average house price to incomes 13.0 7.9 new Cambridge South station. Local
limited with most space located in the steering groups, such as Cambridge 0.0%
Ahead, continue to be influential in 2014 2015 2016 2017 2018 2019 2020 2021 2022
city centre periphery and northern Prosperity and productivity
creating and supporting initiatives to
fringe* locations. A particularly Average weekly earnings £648 £571
Unemployment rate (ILO) 2.5% 4.0% improve transport infrastructure, not only
uncertain second half of the year led
GVA per worker 48,596 27,339 in the city centre, but also the wider area.
to a slight slowdown in demand and
enquiry levels, but with the general • In August 2019, the Combined Authority • M
ore recently, the preferred option for the East
election now passed, activity has Skills and Innovation Board voted to approve £1.7 million West Rail link between Cambridge and Oxford
% NVQ4 or above 61.5% 39.3% of funding to develop the CAM Metro via Cambourne has now been announced in
already picked up. Students as % of population 15.2% 21.1%
Outline Business Case. The CAM Parliament (see map below). While this route
Business births, 2018 605 380,580
• T
he office market has witnessed Metro will run across Cambridgeshire will support economic growth across the line
exceptional rental growth this year covering 88 miles, including 7.4 miles and decreased journey times, as with any major
achieving £46.50 psf in the CB1 and of underground corridors beneath infrastructure projects there are also significant
Station Road area. Rents are unlikely Cambridge. This approval means that a challenges that may arise as a consequence,
to increase over this level in the total of £3 million of funding is now in including a duplication of the proposed metro
place to move the scheme forward. between Cambourne and Cambridge.
coming 12 months due to the lack of
available built stock.
• W
hile activity in the occupational Preferred route option area Potential EWR station
Potential EWR
station area
Existing train line
• In the industrial market, availability markets has varied across the different Existing train station Potential new Potential new Network
Guided busway
Network Rail station Rail station area
remains high, in excess of 1 million sectors, the investment side performed
sq ft, which has been demonstrated well, with £323 million trading in 2019, Sources: Esri, USGS | Esri UK, HERE, Garmin, FAO, NOAA,
Towards Peterborough Towards Norwich
Guid
by the fact that take-up in 2019 was marginally up on the 2018 figure. This
A1
4
Waterbeach
dBe
A10
us
wa
noticeably down on 2018. was bolstered by the £125 million sale of
Papworth
Bar Hill
y
A1
Everard Histon
Milton
30 and 50/60 Station Road, in addition St Neots
• T
he retail and leisure market has
Sharnbrook
Cambourne (new)
Cambridge North
to some significant purchases by local
A428
M11
Towards Kettering,
been driven by new national food
Corby & Leicester
Croxton Caxton
authorities. Prime office and industrial Wyboston
Cambridge (modified)
Towards Ipswich
and beverage operators, with brands A6
Abbotsley Bourn
yields were unchanged at 4.5% and 5.5% Great Toft Comberton Dullingham
B1040
St Neots /
such as BrewDog and Giggling Squid
Grasdsen Barton
Cambridge South
Ravesden Sandy area (new) (Could form part of EWR)
in 2019, while prime retail yields softened
A1198
moving into the city centre area
Clapham 21 B1046 1
A4
Trumpington A1
Great
by 100 basis points to 6.0%.
Renhold Eversdon
Great Barford Gamlingay
replacing failed operators Jamie’s Haslingfield Hauxton Shelford
Bedford (modified) Wimpole Great
Blunham Harston A1
03 Shelford 30
Italian and Cau. Retail rents have Sandy A6 7
Bedford St Johns A603
* Cambridge Science Park, Cambridge Business
Potton
Orwell
remained flat at £210 psf (Zone A). Park and St John’s Innovation Park Wrestlingworth
Foxton
Shepreth
Kempston Hardwick Whittlesford Parkway
Cotton End
Wixams
Meldreth
A6
21
Biggleswade
A4
00
Bassingbourn 05
A5
A1
Haynes
30
1
Towards
A6
Royston
A1
Milton Keynes
& Oxford
Towards Luton Airport & London Towards Hitchin & London Towards Hitchin & London Towards Stansted Airport & London
,
Source: East West Rail Consortium
2 carterjonas.co.uk 3
OFFICE Take-Up
MARKET • T
ake-up of office and laboratory space totalled
690,000 sq ft in 2019. This was close to a third
above the 2018 total, but 13% below the five-
year annual average of 790,000 sq ft. While
leasing activity was strong during the first
half of the year, the second half was slightly
subdued by wider political uncertainty.
• D
uring the year, a large volume of transactions
fell within the sub-10,000 sq ft size bracket,
with an average size of 5,800 sq ft across
PRIME RENT 119 deals. However, there were some sizeable
£46.50 PSF deals, which bolstered leasing activity,
particularly in the CB1 market where Apple
pre-let 79,000 sq ft at 30 Station Road in
2019 TAKE-UP October. The firm is looking to occupy the
690,000 SQ FT space upon completion in 2021 and also
leased 23,000 sq ft in nearby 10 Station Road
in September in order to accommodate its
AVAILABILITY immediate staffing requirements.
643,000 SQ FT • O
ther notable deals were agreed outside
the city centre, including 61,000 sq ft by
DisplayLink and 26,000 sq ft by Citrix Abcam HQ, Cambridge Biomedical Campus
Systems, both at Cambridge Science Park,
and 51,000 sq ft by AstraZeneca at
Eastbrook House.
THE HEADLINE projects completed throughout 2019. This Figure 3 Cambridge prime office rents
RENT OF £46.50 PSF includes the 100,000 sq ft Abcam Building at Source: Carter Jonas
WAS RECORDED Availability and development The Biomedical Campus.
AT 50/60 STATION Prime rent, £ psf
CBD
Northern Fringe parks
ROAD (WITHIN CB1) • L
ooking ahead, the most notable projects in
SHOWING A 12% • A
vailability across the office market decreased 50
the pipeline include the 93,700 sq ft office
INCREASE FROM THE over the last 12 months, from 786,000 sq ft
development, One Cambridge Square at
PREVIOUS YEAR. to 643,000 sq ft and space remains very
CB4, the refurbishment of 270 Cambridge
45
limited in the CB1 and Station Road area. With
Science Park along with 25,000 sq ft at 40
the completion of 50/60 Station Road in the
Babraham Research Campus.
second quarter of 2019, which is now fully 35
Figure 2 Cambridge office take-up
occupied, and 30 Station Road already pre-let,
Source: Carter Jonas
Office/lab take-up
only smaller units remain. Rental trends 30
Annual take-up, sq ft Average
• In the northern fringe, Cambridge Business 25
• T
he headline rent of £46.50 psf was
1,200,000 Park and the Maurice Wilkes Building in St
recorded at 50/60 Station Road (within 20
John’s Innovation Park are now fully occupied,
CB1) showing a 12% increase from the
leaving approximately 440,000 sq ft available,
previous year. 15
1,000,000 101,000 sq ft of which is located in Cambridge
Science Park. • L
ooking to the periphery, in most cases rents 10
can be 20-25% lower than the CB1 area,
800,000 • C
ambridge Science Park is undergoing 5
and therefore a good alternative for
a period of transformation since the
occupiers looking to lease slightly more
collaboration with TusPark, who completed 0
affordable space still within close proximity
600,000 construction of the 40,300 sq ft Bio-
09
19
10
13
14
16
18
15
12
17
11
20
20
20
20
20
20
20
20
20
20
to the station.
20
Innovation Centre in May 2019. A further
200,000 sq ft is currently under construction • In the northern fringe, headline rents
400,000 to the front of the park, as well as a number of increased to £36.00 psf through the letting
other significant refurbishments taking place of the final floor at the Maurice Wilkes have since experienced growth, due to the
elsewhere on the estate in order to remain Building on St Johns Innovation Park, but still exceptional lettings at 50/60 Station Road,
200,000
competitive and attract tenants who are 25% lower than in the CB1 area. the gap has once again widened.
looking for good quality workplaces.
• T
he rental gap between the northern fringe • In terms of rental incentives, we are still
0 • D
evelopment in the out of town locations and CB1 had narrowed marginally about seeing, on average, one month rent free for
13
14
19
16
18
15
12
17
11
remains healthy with several large-scale two years ago and while both locations every year term certain.
20
20
20
20
20
20
20
20
20
4 carterjonas.co.uk 5
INDUSTRIAL
MARKET
PRIME RENT
£16.50 PSF
2019 TAKE-UP
255,000 SQ FT
AVAILABILITY
1.12 MILLION
SQ FT
Cambridge Medical Robotics, Unit A1, Evolution Business Park
• T
ake-up of industrial property, which covers • P
rospective occupiers are increasingly
the areas of Cambridge, East Cambridgeshire looking for units in the mid-tech market,
and South Cambridgeshire, totalled 255,000 however much of the available space
THERE IS A CONTINUAL sq ft during 2019. This was significantly in Cambridge is unable to satisfy this
PRIME RENTS HAVE
TREND FOR CAMBRIDGE REMAINED AT £16.50 PSF
down on 2018, where close to 500,000 sq requirement. Evolution Business Park, the FOR TRADE UNITS AND
BASED TECH FIRMS TO
OCCUPY INDUSTRIAL UNITS ft was transacted, predominantly due to the home of Cambridge Medical Robotics, is a £13.50 PSF FOR GENERAL
AS IF THEY WERE OFFICES absence of larger deals. The most significant good example of mid-tech assets, offering INDUSTRIAL
deal of the year was Network Rail’s leasing of manufacturing space as well as offices and
45,000 sq ft at Buckingway Business Park in social areas.
December, followed by three other deals over
• T
here is a continual trend for Cambridge-
10,000 sq ft.
based tech firms to occupy industrial units
• A
s at the end of 2019, 1.12 million sq ft was as if they were offices, primarily due to the
available across the market, up by 67% on operational flexibility a warehouse offers, but
the former Spicers site in Sawston. Closer
2018. With annual take-up averaging circa also because they are more cost effective.
to town, Travis Perkins acquired the former
300,000 sq ft over the last three years, there
• P
rime rents have remained at £16.50 psf Carl Zeiss site at 511 Coldhams Lane. This
is now close to four years of supply left.
for trade units and £13.50 psf for general has released their Devonshire Road site for a
• U
nder the most recent Local Plan, Policy 41, all industrial, representing no change over the higher value mixed-use scheme.
‘B’ use class properties (office and industrial) previous year.
• F
urther afield, DB Broadcast have acquired
have protection, meaning that it will need to
• In the owner occupier sphere, notable 1.5 acres at Lancaster Way in Ely to build a
be demonstrated there is no demand over a
deals include Huawei forging ahead with a new facility at a price of £438,000 per acre,
period of 12 months before an application for
planning application for 300,000 sq ft on setting a new headline land value at the park.
a change of use will be considered.
6 carterjonas.co.uk 7
RETAIL • C
ambridge remains a popular retail and restaurant
destination. According to the Cambridge BID,
MARKET although annual footfall in 2019 was down by 3.7%
on 2018, 7.7 million people still visited the area.
• T
he food and beverage sector is holding up well,
reinforced by the opening of several brands
throughout the year. The development of new units
for national operators including Five Guys and Tortilla
has now completed on Market Square, with both
restaurants opening their doors for business during
the summer. In the Grafton Centre, a handful of new
restaurants also opened in 2019, including Gail’s, La
CITY CENTRE Piazza and Duck Truck. Since its refurbishment, the
VACANCY RATE centre has become more diverse, housing not only
1% shops and restaurants. There is now a significant
leisure provision, including a cinema, gym, ping
pong parlour and a social hub, which has assisted in
attracting more visitors.
PRIME RENT
£210 PSF • O
utside the Grafton Centre, planning approval has
(ZONE A) been granted for a new eight-storey, 153-bedroom
Premier Inn Hub hotel, which will also include a
restaurant on the ground floor. This development will
involve significant changes to the road infrastructure,
with new bus facilities in addition to pedestrian and
cycling routes providing better access to the area.
• A
s at the end of 2019, prime rents in the city centre
were £210 psf (Zone A), down from £220 psf (Zone
A) in 2018. With traditional national retailers facing
FOOD AND BEVERAGE difficulties across the country, as is well documented,
OPERATORS ARE STILL food and beverage operators are still actively looking
ACTIVELY LOOKING TO
EXPAND IN CAMBRIDGE to expand in Cambridge. Whilst a reduction in rental
levels is unhelpful to landlords, this re-basing of rents
gives occupiers more breathing space in a difficult
retail environment.
Franco Manca, Costa Coffee,
Brewdog, Bene’t Street Five Guys and Tortilla,
Market Passage
8
COMMERCIAL
PROPERTY RENTS AND YIELDS SUMMARY
INVESTMENT RENTS YIELDS
TRENDS AND
VALUES
PRIME CHANGE FORECAST CHANGE
RENT OVER LAST NEXT 12 PRIME YIELD OVER LAST
(£ PSF) 12 MONTHS MONTHS 12 MONTHS
Office £46.50 4.5%
2019 Industrial £16.50 5.5%
INVESTMENT
£323 MILLION Retail (Zone A) £210 6.0%
PRIME
OFFICE YIELD
4.5%
PRIME
INDUSTRIAL • Investment demand for commercial
Figure 4 Cambridge - Prime yields
YIELD property in Cambridge remained robust, Source: Carter Jonas
5.5%
with £323 million trading in 2019, up
slightly on the £315 million recorded in Prime yield (%) 2017 2018 2019
the previous year, bolstered by the sale 7.0
of 30 and 50/60 Station Road for £125
PRIME million in October. PSP Investments
RETAIL YIELD (Canada) acquired a 50% stake from 6.0
6.0% Aviva Investors, who will continue to act
as the development manager for the 5.0
remainder of the scheme.
• In the office sector, South 4.0
Cambridgeshire District Council
purchased Building 140 in Cambridge
Science Park for £13 million (5.69% net 3.0
initial yield) in March.
• R
etail and leisure investments 2.0
totalled £121 million during the year.
Cambridgeshire County Council acquired 1.0
a Tesco supermarket on Cheddars
Lane for £51 million at a 4.5% net initial
yield in September. Furthermore, the 0.0
155-bedroom Tamburlaine Hotel on Office Industrial Retail
Station Road was sold for £55 million to
Ability Group, at a 5.0% net initial yield,
and will now trade under the Clayton
Hotel brand.
• H
ealthy investment performance over
market sentiment. Looking ahead, we
the last two years has kept yields at
expect these yields to maintain their
keen levels in most sectors. Prime office
current levels this year, with the exception
Above: and industrial yields were unchanged at
of the industrial sector, where yields
50/60 Station Road, CB1 4.5% and 5.5% in 2019, having previously
may tighten further as a result of strong
tightened over 2018, while prime retail
Right: demand from investors, despite rising
yields softened to 6.0% in line with
22 Cambridge Science Park availability in the occupational market.
10 carterjonas.co.uk 11
THIS
PUBLICATION
IS PART OF OUR
COMMERCIAL
EDGE
RESEARCH
SERIES.
To read full property market insights for
our core commercial locations, visit
carterjonas.co.uk/commercialedge
ABOUT CARTER JONAS Contacts:
Carter Jonas LLP is a leading UK property Will Mooney Head of Eastern Commercial
consultancy working across commercial property, 01223 558032 | will.mooney@carterjonas.co.uk
residential sales and lettings, rural, planning,
development and national infrastructure. Supported Scott Harkness Head of Commercial
by a national network of 33 offices and 800 020 7518 3236 | scott.harkness@carterjonas.co.uk
property professionals, our commercial team is
Daniel Francis Head of Research
renowned for their quality of service, expertise and
020 7518 3301 | daniel.francis@carterjonas.co.uk
the simply better advice they offer their clients.
Find out more at carterjonas.co.uk/commercial
01223 315716
One Station Square, Cambridge CB1 2GA
cambridge@carterjonas.co.uk
© Carter Jonas 2020. The information given in this publication is
believed to be correct at the time of going to press. We do not
however accept any liability for any decisions taken following this
publication. We recommend that professional advice is taken.
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