When Estates Gazette cast a forensic eye over office opportunities in central Cambridge 20 months ago (22 February 2014), it found just a handful of redevelopment sites and a similar number of refurbishment schemes. Since then, the pipeline has shrunk further, with the removal of up to 300,000 sq ft now either confirmed or earmarked for student accommodation.
The main show in town therefore continues to be Brookgate’s phased CB1 development centred on Station Road. The latest 65,000 sq ft building is due to complete next month – 22 Station Road is almost fully let to engineer Mott MacDonald and law firm Birketts (see below) – and work is well under way on the next: One The Square (129,000 sq ft) which should be ready in November 2016 and is already 40% prelet.
Local property agents suggest that just one more letting is likely to trigger the start of CB1’s next phase: 50 & 60 Station Road (pictured). Earlier this month, and in spite of vociferous protests from local residents unhappy with the additional massing, Brookgate won revised planning consent for the 183,000 sq ft block which, if started by the end of this year, could complete in early 2018.
The lack of availability in central Cambridge means owners of the dozen out-of-town business, research and science parks dotted around the city are considering speculative buildings. But, so far, there has been no mad rush.
“Developers are bringing space to market in a tempered way,” says Bidwells partner Will Heigham. “However, requirements are only likely to increase – and if they do, developers may push the button earlier.”
At Cambridge Science Park, for example, Trinity College is awaiting planning consent for a 75,000 sq ft headquarters building on plots 26/27 (pictured, which, if granted, would allow completion in early 2017.
Occupational demand is changing, notes Savills’ director Rob Sadler. “The market for 10,000-20,000 sq ft of existing space is thin, but no one is unduly concerned because there is virtually no space [in that size bracket] in any case,” he says.
A reduction in the supply of second-hand space is pushing rents up from £12 to £16 per sq ft, says Chris Goldsmith, managing director of Turnstone Estates. “We’re in that phase of the market when we’re seeing a squeeze,” he adds.
Occupier view – new offices in Cambridge and Ipswich
East Anglian law firm Birketts doesn’t do things by halves. Rather the opposite: it does them twice over. When the firm decided to upgrade its office accommodation, it found itself doing so in two separate centres – Cambridge and Ipswich – although the firm’s senior associate and commercial property specialist, Nick Pickersgill, admits that was more by chance than design.
Next month, the 70 staff at 30 Station Road, Cambridge, will decamp to their new workspace. But they won’t have far to go – they are taking up residence in 22 Station Road, the latest phase of Brookgate’s CB1 development to complete (see main text).
“We basically ran out of space, so we decided to move next door,” says Pickersgill, who was not concerned about the lack of choices elsewhere in the city. “This is very definitely the place we want to be,” he adds. “For us, it was a no-brainer.”
No doubt an attractive rental level, agreed back in 2013 when the economic outlook was considerably less rosy, helped? “We think we secured a good deal. We certainly came to a price we’re comfortable with,” says Pickersgill, who will not reveal the actual numbers. The firm will move into 15,000 sq ft – large enough to accommodate an increase of up to 50 staff, which Pickersgill hopes to recruit as his business picks up new corporate, property and agricultural work around the city.
Further north, in Ipswich, Birketts faced a slightly different situation. Its 270 staff are housed in three properties, totalling 35,000 sq ft, and the firm had spent the best part of a decade looking at ways of bringing them together under one roof. The solution came from client Churchmanor Estates, which agreed to assemble a site and build out a 50,000 sq ft headquarters on Princes Street (pictured). Planning consent was granted this summer and construction is due to begin early next year.
Pickersgill says the relocation, scheduled for the first half of 2017, has gone down well with staff. “We’ll be going from individual rooms in Georgian buildings – which are horribly energy-inefficient – to brand-new open-plan space,” he says. “The existing layouts are an absolute rabbit warren, no longer really fit for purpose, so people can’t wait to move.”
Ipswich – right royal street improvements
When Connexions 159 – Ipswich’s first speculative office development in a generation – completes in April 2016, it won’t just be the 44,000 sq ft building that has had a facelift; its surroundings have been upgraded, too. That’s thanks to public realm improvements, including the removal of a roundabout on Princes Street, which links the railway station with the town centre.
“Parts of Princes Street were down at heel, but now the area feels fresh, busier and regenerated, causing firms to look at the lower end towards the station,” says Chris Moody, director at Savills’ Ipswich office. He points to Birketts’ new building (see occupier box, above) and says another site nearby, in which Ipswich borough council has an interest, could deliver 45,000 sq ft, although speculative construction is unlikely.
Moody, letting agent on Connexions 159, where quoting rents are a barrier-breaking £18 per sq ft, expects at least half the building to let before completion, with potential occupiers coming from the professional, accountancy and shipping sectors. Three prospective tenants are in the frame and any deal signed before the end of the year, when added to the Birketts prelet, will trounce the 80,000 sq ft total take-up recorded in the town in 2014.
If property folk aren’t getting over-excited at the prospect, it’s because they are realistic about their potential tenant base. “Ipswich is generally a non-aspirational market,” says Moody, “and that means we don’t attract much inward investment. But there is churn.”
That local movement is illustrated by Sanctuary Personnel putting 27,000 sq ft of secondhand space under offer as EG went to press. Even so, more activity is not pushing up rents, which remain at between £10 and £12.50 per sq ft.
Norwich – no spec offices yet
Unlike Ipswich, Norwich has yet to see any speculative office development in the current cycle. “It’s certainly going through developers’ minds,” says Bidwells partner Will Jones. “The main problem is that build costs have gone up in the past 15 months, whereas leases are still 10 years with a break at the fifth year and the danger of empty rates if the building isn’t let quickly.”
However, demand is more buoyant than it was in 2014 and several requirements have appeared above the 10,000 sq ft threshold that characterises the Norwich city centre market.
Jones says activity will have to be sustained for at least six more months (well into 2016) before speculative development is seriously considered. “It’s most likely that a prelet, say for 20,000 sq ft, would fuel speculative building thereafter – as has happened in previous cycles,” he predicts.
In the meantime, a limited amount of speculative refurbishment is taking place, including 14,750 sq ft at 31 King Street, due to complete in early November. These makeovers can boost rents significantly – in this case from £10.50 to £13.50 per sq ft.
Most (464,000 sq ft) of the city’s available office stock (624,000 sq ft) is in the core, and 160,000 sq ft is up for grabs out of town. “Most of the offices affected by permitted development rights that will be converted to residential have already been accounted for,” says Jones.
When Estates Gazette cast a forensic eye over office opportunities in central Cambridge 20 months ago (22 February 2014), it found just a handful of redevelopment sites and a similar number of refurbishment schemes. Since then, the pipeline has shrunk further, with the removal of up to 300,000 sq ft now either confirmed or earmarked for student accommodation.
The main show in town therefore continues to be Brookgate’s phased CB1 development centred on Station Road. The latest 65,000 sq ft building is due to complete next month – 22 Station Road is almost fully let to engineer Mott MacDonald and law firm Birketts (see below) – and work is well under way on the next: One The Square (129,000 sq ft) which should be ready in November 2016 and is already 40% prelet.
Local property agents suggest that just one more letting is likely to trigger the start of CB1’s next phase: 50 & 60 Station Road (pictured). Earlier this month, and in spite of vociferous protests from local residents unhappy with the additional massing, Brookgate won revised planning consent for the 183,000 sq ft block which, if started by the end of this year, could complete in early 2018.
The lack of availability in central Cambridge means owners of the dozen out-of-town business, research and science parks dotted around the city are considering speculative buildings. But, so far, there has been no mad rush.
“Developers are bringing space to market in a tempered way,” says Bidwells partner Will Heigham. “However, requirements are only likely to increase – and if they do, developers may push the button earlier.”
At Cambridge Science Park, for example, Trinity College is awaiting planning consent for a 75,000 sq ft headquarters building on plots 26/27 (pictured, which, if granted, would allow completion in early 2017.
Occupational demand is changing, notes Savills’ director Rob Sadler. “The market for 10,000-20,000 sq ft of existing space is thin, but no one is unduly concerned because there is virtually no space [in that size bracket] in any case,” he says.
A reduction in the supply of second-hand space is pushing rents up from £12 to £16 per sq ft, says Chris Goldsmith, managing director of Turnstone Estates. “We’re in that phase of the market when we’re seeing a squeeze,” he adds.
Occupier view – new offices in Cambridge and Ipswich
East Anglian law firm Birketts doesn’t do things by halves. Rather the opposite: it does them twice over. When the firm decided to upgrade its office accommodation, it found itself doing so in two separate centres – Cambridge and Ipswich – although the firm’s senior associate and commercial property specialist, Nick Pickersgill, admits that was more by chance than design.
Next month, the 70 staff at 30 Station Road, Cambridge, will decamp to their new workspace. But they won’t have far to go – they are taking up residence in 22 Station Road, the latest phase of Brookgate’s CB1 development to complete (see main text).
“We basically ran out of space, so we decided to move next door,” says Pickersgill, who was not concerned about the lack of choices elsewhere in the city. “This is very definitely the place we want to be,” he adds. “For us, it was a no-brainer.”
No doubt an attractive rental level, agreed back in 2013 when the economic outlook was considerably less rosy, helped? “We think we secured a good deal. We certainly came to a price we’re comfortable with,” says Pickersgill, who will not reveal the actual numbers. The firm will move into 15,000 sq ft – large enough to accommodate an increase of up to 50 staff, which Pickersgill hopes to recruit as his business picks up new corporate, property and agricultural work around the city.
Further north, in Ipswich, Birketts faced a slightly different situation. Its 270 staff are housed in three properties, totalling 35,000 sq ft, and the firm had spent the best part of a decade looking at ways of bringing them together under one roof. The solution came from client Churchmanor Estates, which agreed to assemble a site and build out a 50,000 sq ft headquarters on Princes Street (pictured). Planning consent was granted this summer and construction is due to begin early next year.
Pickersgill says the relocation, scheduled for the first half of 2017, has gone down well with staff. “We’ll be going from individual rooms in Georgian buildings – which are horribly energy-inefficient – to brand-new open-plan space,” he says. “The existing layouts are an absolute rabbit warren, no longer really fit for purpose, so people can’t wait to move.”
Ipswich – right royal street improvements
When Connexions 159 – Ipswich’s first speculative office development in a generation – completes in April 2016, it won’t just be the 44,000 sq ft building that has had a facelift; its surroundings have been upgraded, too. That’s thanks to public realm improvements, including the removal of a roundabout on Princes Street, which links the railway station with the town centre.
“Parts of Princes Street were down at heel, but now the area feels fresh, busier and regenerated, causing firms to look at the lower end towards the station,” says Chris Moody, director at Savills’ Ipswich office. He points to Birketts’ new building (see occupier box, above) and says another site nearby, in which Ipswich borough council has an interest, could deliver 45,000 sq ft, although speculative construction is unlikely.
Moody, letting agent on Connexions 159, where quoting rents are a barrier-breaking £18 per sq ft, expects at least half the building to let before completion, with potential occupiers coming from the professional, accountancy and shipping sectors. Three prospective tenants are in the frame and any deal signed before the end of the year, when added to the Birketts prelet, will trounce the 80,000 sq ft total take-up recorded in the town in 2014.
If property folk aren’t getting over-excited at the prospect, it’s because they are realistic about their potential tenant base. “Ipswich is generally a non-aspirational market,” says Moody, “and that means we don’t attract much inward investment. But there is churn.”
That local movement is illustrated by Sanctuary Personnel putting 27,000 sq ft of secondhand space under offer as EG went to press. Even so, more activity is not pushing up rents, which remain at between £10 and £12.50 per sq ft.
Norwich – no spec offices yet
Unlike Ipswich, Norwich has yet to see any speculative office development in the current cycle. “It’s certainly going through developers’ minds,” says Bidwells partner Will Jones. “The main problem is that build costs have gone up in the past 15 months, whereas leases are still 10 years with a break at the fifth year and the danger of empty rates if the building isn’t let quickly.”
However, demand is more buoyant than it was in 2014 and several requirements have appeared above the 10,000 sq ft threshold that characterises the Norwich city centre market.
Jones says activity will have to be sustained for at least six more months (well into 2016) before speculative development is seriously considered. “It’s most likely that a prelet, say for 20,000 sq ft, would fuel speculative building thereafter – as has happened in previous cycles,” he predicts.
In the meantime, a limited amount of speculative refurbishment is taking place, including 14,750 sq ft at 31 King Street, due to complete in early November. These makeovers can boost rents significantly – in this case from £10.50 to £13.50 per sq ft.
Most (464,000 sq ft) of the city’s available office stock (624,000 sq ft) is in the core, and 160,000 sq ft is up for grabs out of town. “Most of the offices affected by permitted development rights that will be converted to residential have already been accounted for,” says Jones.
When Estates Gazette cast a forensic eye over office opportunities in central Cambridge 20 months ago (22 February 2014), it found just a handful of redevelopment sites and a similar number of refurbishment schemes. Since then, the pipeline has shrunk further, with the removal of up to 300,000 sq ft now either confirmed or earmarked for student accommodation.
“Developers are bringing space to market in a tempered way,” says Bidwells partner Will Heigham. “However, requirements are only likely to increase – and if they do, developers may push the button earlier.”
East Anglian law firm Birketts doesn’t do things by halves. Rather the opposite: it does them twice over. When the firm decided to upgrade its office accommodation, it found itself doing so in two separate centres – Cambridge and Ipswich – although the firm’s senior associate and commercial property specialist, Nick Pickersgill, admits that was more by chance than design.
