What is the Brain Belt and why does it matter?
With £5.5 billion of infrastructure investment and one million new homes planned for the arc between Cambridge and Oxford, we investigate the opportunities this presents for commercial real estate.
1 minute to read
Oxford and Cambridge, along with London, form the ‘golden triangle’. It's home to the UK's top universities and associated research & development centres. Recognising the innovation and growth in this region, the UK government has earmarked £5.5 billion of infrastructure spending along the northern edge, known as the CaMkOx Arc or ‘Brain Belt’. As well as a new expressway and East-West railway, one million homes are planned to be built there by 2050.
These cities are able to attract and retain talent. This should drive the population growth and wealth creation necessary for well-performing commercial real estate markets. The universities in Cambridge and Oxford have attracted global names such as Amazon and Microsoft in Cambridge, while Oxford has TripAdvisor, which drives agglomeration benefits.
The education and innovation sectors are also lower beta, i.e. their economies and commercial real estate markets could be impacted less by cyclical downswings. For example, Cambridge experienced stable or increasing rents and compressing prime office yields throughout the Global Financial Crisis, while Oxford felt only one year of negative rental growth and a 25 bps softening of prime office yields*.
Both markets are seeing an increase in investment grade stock and their commercial real estate markets are being accessed by institutional capital. As the region develops, we expect other centres within the Brain Belt, such as Bicester, Milton Keynes and Bedford, to also benefit. While the office market in Milton Keynes is already active, Bicester and Bedford are less mature centres.
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