Office rents in Oxford have reached £40 per sq ft and are predicted to reach £48.50 in five years.
Research by property consultancy Bidwells has shown high demand and a lack of supply over the last 10 years is fuelling the increase.
There is currently demand for 905,000 sq ft of office and laboratory space in the city, while at the same time, availability has dropped to a 10-year low of 516,800 sq ft (6.3 per cent).
Rents in Oxford had stood at £23 per sq ft in 2014 and at £35 per sq ft in 2018.
Bidwells’ Summer 2019 report states: “With new investment and confidence injected into the market following announcements by L&G (a £4 billion partnership with the University of Oxford), Harwell (£110 million funding from Santander) and others, knowledge industry demand will inevitably follow.
“New space will come forward over the coming year, but this is unlikely to keep pace with demand and a further uplift in rents is expected.”
David Williams, partner, business apace agency at Bidwells in Oxford, said: “The demand, take-up and rental data is largely dictated by the availability of stock, so in a sense we have a glass ceiling and the true latent demand will be visible when we break through this.
“In the short-term existing stock is being rapidly re-purposed, alongside 140,000 sq ft of refurbishment and construction currently under way returning higher rents, whilst in the medium term the main campuses and city centre regeneration projects will inject millions of sq ft over the next 10 years, a lot of which can be accounted for.”
Bidwells says prime office rents throughout the Oxford to Cambridge Arc have risen by 11.9 per cent compared to a national average outside London of 2.2 per cent.
Bidwells forecasts that Cambridge rents will reach £50 per sq ft over the next five years with prime office rents now at £45 per sq ft.
Dick Wise, head of business space agency, said: “The Government’s Industrial Strategy has focused on developing the UK’s knowledge-based economy and the Oxford-Cambridge Arc is right at the centre of it.
“Our figures show that the Oxford-Cambridge Arc region now contains more than 20 per cent of the UK’s entire science & technology park floor space.
“The Cambridge office market is on track for its busiest year since 2014, during one of the most uncertain economic periods in living memory and now looks set to break the once unthought-of £50 per sq ft mark within five years.
“Oxford is a global hotspot for innovation and technology transfer, with a mature eco-system plus billions of pounds of public and private investment being made into fast-growing spin out companies, national research facilities and infrastructure.
“The recent announcement of a partnership between Legal and General and the University of Oxford in a recent example.”