Oxford has seen strong growth in 2021, which will result in increased occupational demand in the short term, but in a market with limited supply
Corporate investment in Oxford in 2021
In total, corporate investment raised by companies headquartered in the Oxford area totalled around £4.8 billion during 2021, of which over 58% was related to life sciences. Companies in this sector include ‘drug discovery’, ‘discovery tools’ and ‘electronic equipment and instruments’, a category that Oxford Nanopore Technologies, which IPO’d last year, sits within.
Early- and later-stage fundraising, for start-up and scale-up life science companies, often involves venture capital (VC) funding. Capturing and assessing the opportunities of this type is important to track the growth and formation of future companies. In total, in 2021, just over £1 billion was recorded as VC for Oxford. Key deals include Evox Therapeutics and Vaccitech, the latter of which did later-stage VC in 2021 and then an IPO.
The delivery of new buildings in the Oxford market will see an even wider distribution of corporate investment deals in the future
Steven Lang, Director, Commercial Research
The chart below shows the 2021 VC raised for the life science sector but by global city. For Oxford, sitting in 13th place is an incredible achievement and testament to the city’s global recognition as a centre of life science research and development. This will support the real estate markets in the future.
There is clearly a need to look beyond the Oxford(shire) region to understand the prospects and identify the future occupiers. The combined ‘golden triangle’ of London, Oxford and Cambridge would place it third on the chart, which is impressive and there will be additional occupiers from across the globe that will look to locate in Oxford in the future.
The map below shows distinct clustering of capital raises in 2021. Note that the deal symbols in some locations have been spread out to show the quantum rather having the deals sitting on top of each other.
Office market summary
Oxford’s global reputation has increased significantly and global companies, particularly within the science sectors, will have appetite to benefit from being within the Oxfordshire ecosystem.
The laboratory market in Oxford saw four deals between 18,000 and 30,000 sq ft, which shows the sign of a maturing market. These were signed at Oxford Business Park or Harwell Campus. This demand for more laboratory space saw this type of space account for 52% of total take-up in 2021. The availability of office and laboratory space rose by 18% in 2021 due to ‘grey’ space released by tenants, which was predominantly Grade B quality. Total availability stood at approximately 740,000 sq ft at the end of last year. This is expected to recede this year, but only show a 6% reduction by the end of 2022.
The city centre market, in terms of rents, will continue to rise at the same trajectory seen since 2020. The limited level of supply, but high level of occupier interest, will see rents move above £50 per sq ft this year.