Cambridge’s ability to attract multinational office and lab occupiers in recent years has allowed it to compete with other global cities as a biosciences and pharmaceutical hub.

The flow of investment capital is a lead indicator of future commercial real estate growth. Venture capital (VC) investment, with its focus on the start-up community, is therefore a good indicator of future intentions. Since 2012, £790 million of VC funds has been invested in Cambridge. Of this, £270 million was in the first seven months of 2017.

More than 84% of this funding has been invested in the pharmaceutical, biotechnology and software sectors. These have become the key sectors for Cambridge’s economy, and will require the further development of start-up, and grow-on, office and laboratory space. The strength of the Cambridge ecosystem reaches beyond the city boundaries. Recently, £40 million was invested in the cancer treatment firm Bicycle Therapeutics, who are based six miles from the city centre at Babraham.

Since 2012, Cambridge has received £4,415 of VC funding per capita – 37% more than its nearest global competitor, Boston, USA.

^{Source: Savills Research}

Of the 10 largest biotech companies in Boston, USA, eight have a Cambridge presence, as the city continues to compete on the global stage.

Over the next three years, around two million sq ft of office and laboratory developments will be delivered in the Cambridge market. However, only 385,000 sq ft of this is speculative, most of which is set to deliver during 2019. Despite the regeneration of the CB1 district, it is the out-of-town markets which will see the majority of floorspace delivered, with particular focus towards the south of Cambridge.

It is not just the multinationals who are competing for space. Cambridge was granted 341 patents per 100,000 people during 2016, almost 19 times the national average. Many of these fast-growth start-up companies require follow-on space, but still need to be located alongside other companies in their industries. SuperX, for example, based on the Babraham Research Campus, operates as a virtual biotechnology company. It uses an established network of outsourced drug development providers. Many of these are also based on the Babraham campus, and will benefit as they grow from continued co-location.

In addition, as seen in Boston, life science companies are beginning to use space more efficiently. It is important, therefore, that Cambridge offers a wide mix and choice of property in order to attract and retain bioscience companies.

^{Source: Savills Research}

There is also a shortage of business incubator space to the south-east of the city, despite strong levels of venture capital investment during both 2016 and 2017. The East of England provides fewer incubators and accelerators per 1,000 new businesses than all other UK regions.

BioMed Realty are developing 108,000 sq ft of speculative grow-on space at Babraham, set to complete during 2019, while future space at Granta Park should act to ease the shortfall. The Bradfield Centre, currently under construction in Cambridge Science Park, will provide 40,000 sq ft of space to nurture around 500 start-ups.

Part of the reason for a shortfall in floorspace is that high-growth small companies are offered favourable rents and are not moved on to conventional office space quickly enough.

If start-ups were offered subsidised rents in the first and second years, leading to harder commercial terms in subsequent years, this would free up space for new start-ups. Graduation from start-up space is vital to create economic growth in Cambridge.

^{Source: Savills Research}