Savills expects investment volumes in the Cambridge market to pick up after investment agents tracked higher levels of positivity at the start of 2024.
In 2023, the number of deals slumped to just over £140m of sales compared to record levels of more than £900m of sales in both 2021 and 2022.
Emily Williams, director of residential research at Savills, said: “With the science sector attracting a wide occupier profile, vendors expect the market to improve in 2024, driven by wider economic and capital market improvements in the UK commercial investment market.
“If high-quality product comes to the market, buyers will appear.”
The current pipeline for office and lab space in Cambridge has the potential to add a net gain of 930,000 sq ft of space, which would nearly double the existing stock in the city.
Williams added: “Whilst it is unlikely that all of these schemes will be developed, the depth of the pipeline highlights the confidence in the market which is in contrast to the majority of other UK locations.”
Savills noted that supply constraints continue to hinder the immediate expansion of both the offices and life sciences markets in Cambridge, with the vacancy rate for available laboratory space at 1.5% across the city. This is, in turn, leading to strong rental growth, resulting in prime laboratory rents moving in excess of £70 per sq ft.
A key deal of 2023 was BioNTech acquiring about 75,000 sq ft at Cambridge Biomedical Campus.
Savills tracked record demand for laboratory space in Cambridge in 2023, with 341,216 sq ft transacted, which represents a 53% share of total office and laboratory take-up in the city. This figure was 61% above the previous highest total recorded in 2019 of 213,125 sq ft.
The offices market is also experiencing a supply shortage with only one grade-A building over 20,000 sq ft available in the city centre in 2024, which is already 50% prelet.
Williams said: “Cambridge sits at a potential turning point, with the government recently announcing ambitions for residential and commercial development that would see the city grow faster than anywhere else in the country.”
Cambridge City Council and South Cambridgeshire District Council are jointly working on unlocking development sites across the region for 8,000 homes and more than 2.9m sq ft of commercial space. The move is set to expand the northern fringe cluster which includes Cambridge Science Park, Cambridge Business Park, St Johns Innovation Park and Cambridge North.
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