Commercial Space – Project detail
Anecdotal evidence from the demand side and statistical evidence from the supply side, suggests that unless availability of commercial property in and around Cambridge is increased, Cambridge’s growth could be impacted.
Image: Photograph used by permission of Cambridge Science Park
Background to Cambridge’s Commercial Space
The growth of Cambridge into a world-leading cluster has been underpinned by an increase in incubator and commercial space in and around the city; catering for the smallest start-ups to the billion dollar companies like ARM and AVEVA that have grown up in Cambridge. Since the creation of Trinity Science Park in the 1970’s, the UK’s first Science Park, there are now over 19 science and business parks in and around Cambridge.
Some existing companies are able to expand physically – in 2016 ARM announced that it would add 18,000 square metres of Grade A office space and two multi-storey car parks with 800 spaces at its headquarters in Peterhouse Technology Park in Fulbourn at a cost of £48m, enabling it to double its headcount to 5,000 over the next 5 years. But the lack of property availability is becoming a serious barrier to our homegrown companies as well as to outside companies that want to establish operations in Cambridge.
With Cambridge now ranked alongside Silicon Valley and Boston as a world leading technology cluster, the city is rapidly becoming a prime destination for inward investment by global technology companies. AstraZeneca’s move to Cambridge has been followed by a steady flow of other high profile businesses into the city – Apple, Amazon and Qualcomm to name just a few. In 2015, it was announced that the $24 billion San Diego-based Illumina would build its European R&D headquarters in Granta Park, Cambridge following its acquisition of Cambridge start-ups Solexa and Bluegnome, and in November 2016 Japanese plastics engineering Enplas Corporation, which has a global annual turnover of $400m and employs over 4,000 people worldwide, moved into Chesterford Research Park.
This combination of indigenous growth and increasing inward investment is starting to put huge pressures on the availability of commercial space at all levels: from incubation to major corporate offices. Fast-growing companies are unable to find space to move on to and release their current space to the next generation coming up. The two prime incubation sites at St John’s Innovation Centre and Babraham Research Campus have waiting lists, and new space is being taken even before construction is completed.
Meanwhile, in just four years the Cambridge Biomedical Campus has gone from empty to using up almost all the land that was planned to last through to 2040. From 2014 to 2015, the availability of Grade A commercial space fell from 250,000 sq. ft. to 70,000 sq. ft. with rents rising by over 15% across the science and business parks in response to the high demand.
While much of the focus is rightly on housing, education and transport, without access to commercial space Cambridge’s growth and attractiveness will inevitably falter as entrepreneurs move away to find new premises and in-movers choose other more accommodating global destinations.
Cambridge Ahead’s Commercial Space project team was formed with the objectives of understanding, in conjunction with the work of the Growth Project, the current and future supply and demand for commercial space at all levels so as to inform the debate on its provision.
The project team is currently pursuing two main projects with another pending:
- We are working to understand the demand for and supply of incubation space which supports Cambridge entrepreneurs at the earliest stages of their company’s growth.
- We are also working to disaggregate the supply and demand figures to better understand the different situations for start-ups, growth companies, large indigenous companies and in-movers. This will include looking at the financing difficulties for the types of leases Cambridge businesses need. Fast-growing companies need flexible short exit leases to allow them to adjust to their growth, while property investors strongly favour long-term leases for security of their investment. There exists though, strong anecdotal evidence from, for example, St John’s Innovation Centre and the Babraham Research Campus, that there may be a third, Cambridge way. This is one that offers short leases with investor security, but an evidenced case needs to be built for investors.
- The third project is pending and will look at the financing of particularly incubation space, which currently comes primarily from Cambridge colleges and Government rather than commercial investors.
These projects aim to create an evidence base to inform the local debate on how future commercial space needs are addressed, as well as engaging those involved in the provision of commercial space in making the case for Cambridge.
With the appointment of Chris Bartram, a non-executive Director of Land Securities Group Plc, as the new Commercial Space group leader, the team is re-aligning and will report further in the Spring of 2017.
Latest figures on office space
Here are the latest figures and key news on office space in Cambridge
Cambridge saw strong 2016 take-up despite uncertainty (Business Weekly – Jan 2017)
Rockspring lets 31,000 sq ft at Cambridge Research Park (Property Funds World – Jan 2017)
£7m revamp of ex-Sepura HQ eases Cambridge office crisis (Business Weekly – Feb 2017)