Under the microscope

Cambridge agents report demand for space on local parks is changing away from traditional office space toward more sophisticated laboratory facilities. David Quinn carried out some of his own research Demand for laboratory space in the science parks around Cambridge is as strong as ever – despite the general slackening in demand that has been the bane of many traditional business parks over the past 12 months. The city has a stock of more than 1m sq ft of life science and biotech laboratories, but demand for this niche area exceeds supply by around 300,000 sq ft, according to local agent Bidwells. Gemini Genomics has paid £25 per sq for a new 32,000 sq ft (2,970m2) building at Cambridge Science Park. Meanwhile, at Granta Park, Cambridge Antibody Technology has paid a similar rent for the 67,000 sq ft (6,225m2) Franklin Building. This was the UK’s first speculatively developed lab building, according to developer MEPC. Such activity illustrates the strength of the science park sector and, as such, Cambridge Science Park – which already houses the largest concentration of this type of scientific activity in Europe – is looking to expand. Owner Trinity College and developer Gallagher Estates have announced their intention to develop an annexe to the park as part of the proposed new settlement at the former Oakington Barracks, Longstanton. Proposals for the settlement include 74 acres of land for employment uses – of which a significant proportion will include R&D facilities for the business and science park annexe. This would add half as much space again to Cambridge Science Park, which is close to its maximum possible size. Jonathan Burroughs of Bidwells, agent for Cambridge Science Park, says that locating the annexe at Oakington will be advantageous for both inward investors and tenants seeking more space. And David Carden, managing director of Gallagher Estates, believes Oakington is the “obvious choice” for a new business park. The only possible stumbling block is the local structure plan, which needs to be approved following public consultation before plans for Oakington can be finalised. Agents believe laboratory development is set to grow in Cambridge and elsewhere as a result of increased confidence in, and understanding of, the sector. “Traditional developers have been wary of developing lab space because the funds don’t understand it and many of them are not usable later as offices,” explains Carol Pawsey of Carter Jonas. “There is an increasing level of understanding although things are slow to change.” Another growth area is likely to be that of incubator units, which have hidden benefits for developers, according to Pawsey. “They have short-term leases of one, two or three years, but very few tenants exercise them and, in any case, they provide a ready supply of expanding companies,” she says. Traditional v science parks Roger Quince, managing director of Granta Park, reiterates the difference in the strength of laboratory demand when compared with that of traditional office parks. “The demand from telecoms firms has slowed down but biotech has continued to develop. It’s the one bit of the market that’s continuing to do quite well,” he says. As well as a fall in demand for traditional office park space, Cambridge could also be hit by a surplus of supply of this type of stock, according to agents. This is likely to put even more of a distance between the fortunes of straight office parks – such as Cambridge Business Park – and purpose-built science laboratory campuses, such as Granta and Cambridge Science Park. Such a situation could present problems for the 750,000 sq ft Cambourne Business Park, which is another park specialising in office and R&D space rather than labs. Two speculatively developed office buildings, 2020 and 2030, totalling more than 100,000 sq ft, have recently been completed, and phase three of the park is under consideration by local planners. Letting agent Jon Hutt of FPDSavills says he is confident that the two buildings will let, despite the fact that his own research shows around 700,000 sq ft of office space will come to the market in Cambridge before April. This is equivalent to around one year’s take-up. “Is that too much? It might be,” he says. “But since the new year we’ve been inundated with business park enquiries. These just weren’t around before Christmas and so you’ve got to conclude that, while the economy remains broadly in good shape, things are still rosy.” The recent announcement that South Cambridge district council will take 55,000 sq ft in a new building at Cambourne next year is likely to have added to Hutt’s bullishness. Other developers, such as Carisbrooke Alliance, are also committed to the Cambridge area. The company has finished developing the second phase of its 240,000 sq ft Buckingway Business Park at Swavesey and the third phase is under construction. “The prospects for Cambridge remain good, especially with the announcement of proposals to widen the A14 and to implement a rapid transit system,” says Carisbrook director Nic Rumsey. “This will dramatically improve communications for business and science parks.” Others, however, are less upbeat about Cambridge’s prospects. Ben Oughton of local agent Januarys believes that the slackening in office demand, combined with the level of supply coming into the market, could have an adverse affect on rental levels. “It’s going to be a different market compared with the acute undersupply we have been used to,” he says. Cambridge business parks and science parks: activity Cambourne has most potential new space Scheme Owner/developer (Agent) Existing floorspace(sq ft) Under construction (sq ft) Potential further floorspace (sq ft)* Cambridge Business Park The Crown Estate (Januarys) 262,000 60,000 n/a Babraham Babraham Institute (n/a) 30,000 n/a 250,000 Cambourne Business Park Development Securities (FPDSavills/ATIS Real Weatheralls) 105,000 140,000 505,000 Cambridge Research Park Slough Estates (Insignia Richard Ellis/Gerald Eve/FPDSavills) 86,000 117,275 396,725 Cambridge Science Park Trinity College Cambridge (Bidwells/Healey & Baker) 1.3m 115,000 132,000 St John’s Innovation Park St John’s College (Carter Jonas) 250,000 n/a n/a Granta Park MEPC (Carter Jonas) 250,000 200,000 220,000 Vision Park Various (various) 133,463 n/a n/a Chesterford Park Morley/Churchmanor (Insignia Richard Ellis) 350,000 n/a Seeking planning for 350,000 Capital Park Capital & Counties/MPM Properties (CB Hillier Parker/Januarys) 173,585 n/a 90,000 Peterhouse Technology Park CIN (Carter Jonas) 160,000 n/a n/a West Cambridge Cambridge University (n/a) 71,000 n/a 369,000 Source: Bidwells *Within current consents/zoning Cambridge: Prime office rents Rents hit a plateau early last year Source: Januarys/IPMI/Catella Key facts: Cambridge Accountant goes to business park ” Accountant Grant Thornton has taken Byron House at Cambridge Business Park. The rent paid was £24 per sq ft on a 10-year lease. Serviced office provider HQ Global Workplaces occupies a 20,000 sq ft building at the site ” Citrix Systems has taken the 43,340 sq ft Building 1030 at Cambourne Business Park at a rent of £18.50 per sq ft ” Cambridge Animation Studios, which creates effects for Hollywood movies, has taken 3,000 sq ft at the Diomed Building, Cambridge Research Park Source: Various