Oxford is undergoing a transformation. We forecast take-up to reach a record 500,000 sq ft during 2017, which is 150% above the historic average, while supply levels are waning.
Some secondary office space has been converted to student and residential rather than kept for refurbishment in the city centre, adding to the pressure on rents on remaining buildings.
Developers in Oxford are now turning their attention north of the city centre as it is more viable for large-scale development. This includes Oxford North, which will be served by both Oxford and Oxford Parkway railway stations.
Cambridge has set the example where an expansive development policy has attracted global occupiers – including Microsoft, AstraZeneca and Apple – and pushed top rents to £36.50psf.
Now, it is time for Oxford to prosper. We expect Oxford to attract talent and global occupiers, potentially driving headline rents to £35psf by the end of 2017, closing the rental differential with Cambridge to £2psf.
Better office space is needed to attract companies and talent, but the length of commute is a major factor. However, a significant minority of workers are willing to increase their commute for the ideal workplace. More than 30% would be willing to add over 30 minutes to their commute (one-way) (for more, see Is Oxford open for business?).
The question is whether this sends some office workers to rival locations? A minority may, but it highlights the importance of creating new office supply in accessible locations in and around the city.
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