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The market today
Oxford is a top three global university. As a cornerstone of the Golden Triangle, 50% of Life Sciences activity in the UK takes place in the city. The innovation ecosystem is distinctly diverse, with core science sectors, biotechnology, chemistry and healthcare, integrating with advanced engineering, deep tech, quantum and information technology. In effect, a perfect blend as science and technology collide and digital capability drives progress. The University conducts cutting-edge research, and numerous science parks and incubators foster entrepreneurship and innovation underpinned by access to a pool of highly skilled graduates, postgraduates and researchers. Notable firms derived from this ecosystem include Vaccitech, Oxford Nanopore and Oxa.
What is the shape of the workplace and science market?
The market in Oxford is circa 7m sq ft of stock, providing a range of office, laboratory and tech box space in the city centre and within established city science clusters. Science and innovation have agglomerated within established districts on the edge of town at Oxford Science Park, Begbroke, Milton and Harwell, and other former business park schemes are now repositioning successfully to attract science. These parks collectively accommodate research and technology-based companies, startups, and corporate offices, with a focus on placemaking, shared amenities and services all necessary to attract the best talent available.
The success of Oxford Sciences Enterprises, established in 2015 to commercialise the University’s intellectual properties, has created a wealth of spin out companies, at a rate of circa 20-30 annually. This growing portfolio of science and technology firms is now home to small and large-scale businesses. A younger workforce has encouraged a focus on science and an inherent demand for laboratory space in the city centre, and schemes at the former Beaver House, Botley retail Park, the Clarendon Centre and Debenhams show an interest in creating an urban labs offer which will be game-changing for the city. Investors, including The Crown Estate, BGO and UBS, are behind this new initiative. Equally, the diversification into the Technology sector has led to the development of Hybrid tech box space in several established innovation schemes. Kidlington Tech Park, Harwell is delivering stock suited to advanced engineering and further afield at Bicester Yasa Mercedes have pre-let c.80,000 sq ft at Bicester Motion, and with Siemens Tech Centre due to open with 24 months in Bicester. This gives this oxford centre a new identity and strong focus with Bicester Arc one of the only sites with power capacity to match occupier demand from this sub-sector.
The pandemic has catalysed the Oxford market, from a relatively parochial one to a city attracting a range of international and UK businesses across diverse sectors. Due to the increase in biotech and physical sciences and the rise in tech and other digital sciences, more demand has concentrated in the out-of-town schemes where available ability and immediate take-up or pre-let interest are accommodated. On average, Oxford has recorded around 315,000 sq ft of take-up annually (over the last 5 years). However, stronger activity and sizeable deals in 2023 propelled the overall take-up to 62% ahead of the longerterm trend. 2024 looks to be another strong year. In the first quarter, 283,000 sq ft has already leased.
Who is taking space?
Given its strong research and innovation platform, Oxford is particularly attractive to firms derived from the Pharmaceutical, Medical and Healthcare sectors. Over the past 5 years, this sector grouping accounts for 47% of take-up. In particular, Oxford is a hub for Biotech and Life Sciences companies, benefiting from the University’s research output.
The most notable recent transaction was Moderna agreeing terms on a 145,000 sq ft research innovation and technology hub at Brookfields Arc’s Harwell science and research campus. The development will comprise two buildings, and a research, development, and manufacturing facility will be created to develop messenger RNA vaccines for respiratory diseases, pending regulatory assessment and licensing. Construction has started, and the facility is expected to be operational in 2025.
Technology firms additionally hold a strong interest in Oxford. The sector accounted for nearly a quarter of take-up over the past 5 years. Oxford attracts technology startups and innovative companies, particularly in fields like artificial intelligence, software development, cybersecurity, and advanced engineering. In its infancy but growing, Quantum computing is considered an avenue of growth supported by collaboration between academia, industry, and government.
What does future demand look like?
Research and development dominate the forecast of business growth in Oxford and, as such, potential real estate activity. At the time of writing, 432,000 sq ft of space requirements are active in the city, with 47% derived from Pharmaceutical, Medical and Healthcare and 20% from firms under the technology umbrella.
What factors will challenge growth?
Although supply levels have risen in Oxford, the pace of the rise has meant a drag on activity. Total availability at the end of Q1 2024 was 482,000 sq ft, equating to a vacancy rate of 7.3%. New space, though, represented only a fifth of this total.
Will pipeline supply grow?
As of Q1 2024, 790,900 sq ft of space was under construction, which is speculative. Most of this space will be completed in 2025, meaning vacancy levels will fall over the next 12 months. Most of the significant speculative schemes in the city are aimed at Oxford’s burgeoning Life Science and Technology sectors. Projects include Trinity by Breakthrough with Tishman at Arc Oxford, which will offer 214,000 sq ft of best-in-class laboratory, office and amenity spaces, delivering in the second half of 2025 and Stanhope and Ontario Teachers PensionPlan Oxford North Project, where Phase 1 will be completed in 2025.
We forecast more balance between in and out-of-town pipeline; Harwell, Oxford Science Park, Oxford North, Begbroke, and Arc will all deliver stock, but this can be balanced with city centre supply with schemes such as Inventa and Fabrica on the Botley Road exploring the concept of an urban lab environment. Bridge Labs and the former Debenhams site will also be delivered within 2-5 years, further bolstering the city centre lab supply.
What will underpin longer-term growth?
Several significant components support the prediction of continued growth in Oxford.
- The National Quantum Strategy, published in March 2023, commits a further £2.5 billion to developing quantum technologies in the UK over the 10 years from 2024, aiming to generate at least an additional £1 billion of private investment into the programme. Oxford is at the forefront of supporting this growth through an established Quantum talent pool (200 researchers) currently linked to the University, alongside the recent opening of the National Quantum Computing Centre on the Harwell Campus. Consequently, the impact of quantum computing on the economy in Oxford, UK, is expected to be profound, catalysing innovation, driving industry transformation, and positioning the region as a global leader in quantum technology research and development. By leveraging its strengths in research, innovation, and collaboration, Oxford can capitalise on the opportunities presented by quantum computing to create a vibrant and sustainable economy for the future.
- A commercialisation footprint is in place through the presence of Oxford Science Enterprises. This helped support a science-business ecosystem with Oxford University, increasing investment in university spinouts from an average of £125m per year (2011-2015) to £1.4bn in 2021.
- The National Infrastructure Commission will boost the economic contribution of the Cambridge-Milton Keynes-Oxford corridor by more than £160 billion a year by adding an East-West Rail connecting Cambridge and Oxford.
