Life sciences and technology businesses have continued to drive activity in the Oxford industrial market, accounting for 79% of space leased so far this year, according to Bidwells.
The consultancy’s most recent Industrial Oxfordshire Arc Market Databook has tracked 218,300 sq ft of industrial space taken in the first six months of 2023, down from 294,000 sq ft reported for the same period a year ago.
There was 249,000 sq ft of industrial space under offer in Oxford at the end of H1 2023, with the availability rate remaining stable year-on-year at 4.2%.
Bidwells noted that the fall in new requirements in the first half of this year was led by the delivery of new stock and the uncertain economic outlook.
As such, the demand for industrial floorspace in Oxford eased to 2.5m sq ft as of 30 June, with a number of larger requirements put on hold. Last year, Bidwells tracked 4.4m sq ft of demand for industrial and research and development space, with larger requirements accounting for 75% of the total.
The most notable deals in the half-year period included Williams Advanced Engineering leasing 57,300 sq ft at Oxford Technology Park and Oxford Nanopore Technologies taking 50,000 sq ft at Abingdon Business Park (pictured).
See also: Royal London lodges plans for Abingdon Business Park development
Duncan May, partner in Bidwells’ business space agency, said: “The growth of high-tech and life sciences is boosting demand for higher-spec hybrid units, whereas demand for standard industrial units is tepid.”
According to Bidwells, rents on standard industrial facilities stood at £17 per sq ft as at the end of H1 2023, while headline rents on hybrid research and development space were £25 per sq ft. Some higher-spec facilities had quoting rents of £30 per sq ft. In mid-2022, prime industrial rents in Oxford averaged £18 per sq ft.
Over the past three years, growth in prime rents on hybrid facilities in Oxford hit 18%, resulting in most new industrial space being delivered in the region expected to be used by the science and tech sectors. There was more than 600,000 sq ft of space under construction at the end of June.
Oxford Technology Park will provide a total of 384,425 sq ft when complete, with almost 40% of the scheme either committed or under offer at the end of H1 2023. The other major schemes coming forward are Tech Edge at the Harwell Campus, measuring 148,000 sq ft, and Nebula at Milton Park, totalling 76,700 sq ft.
Turning to investment in the Oxfordshire research and development and industrial sector, Bidwells noted that activity remained slow. The reduced level of transactions comes amid further outward movement in prime yields, which have risen by 150bp since summer 2022 to 5.25%, a level not seen since 2017.
Nonetheless, there were some key deals, the largest of which was the purchase of Amazon’s electric vehicle charging facility in Banbury. The scheme was bought by pan-European asset manager Infinium Logistics from Paloma Capital and Graftongate for £28m. The deal also includes a drive-through Starbucks facility. Paloma Capital purchased the asset in 2018 for £5m and invested a further £9m in the project.
Another deal saw IM Properties acquiring Wrenbridge and Buccleugh Properties’ hybrid scheme in Cowley for £21.5m.
Elsewhere, Prodrive Motorsport completed a sale and leaseback of its 128,050 sq ft headquarters building in Banbury to Leftfield Capital for £15m, reflecting a net initial yield of 5.6%.
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