The crunch on office, industrial and lab space in Cambridge means that the city is likely to experience a wave of speculative development in the second half of 2014, according to new data from agent Bidwells.
Demand for both laboratory and industrial space is at the highest ?level for 14 years and 10 years respectively. In an indication of how constrained supply has become, only one large lab space – a 13,500 sq ft unit at Bourn Hall – is currently available to rent.
This pales in comparison with the high volume of requirements for lab space, currently estimated to be about 2m sq ft.
Office space is also showing a supply-demand mismatch, with 60% of availability in office stock in spaces of 10,000 sq ft and below – while nearly 75% of requirements are for buildings of more than 10,000 sq ft. There are currently no available buildings in the 30,000 sq ft to 50,000 sq ft bracket. As many as four speculative office developments are expected to commence before the year end, according to Bidwells’ newly released Business Space Data Book.
The pressure on prime space means that additional demand is now spilling over into secondary property, where the rate of rental growth is faster than that of prime for both office and industrial. Secondary office rents increased by 7.1% in the first half of 2014, compared with the same period last year, while prime rents held steady. In the industrial market, secondary rents increased by 18.5%, while prime rose by 5.6%.
“We will see more supply coming to market, but it won’t be able to match demand,” said Will Heigham, partner and head of Cambridge office agency at Bidwells. “We are also seeing a lot of refurbishments of secondary properties.”
Sophia.Furber@estatesgazette.com
