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Lack of prime office space ‘will make firms struggle’
A LACK of quality business premises in and around Oxford could see rents soaring and firms struggling to find accommodation.
Grade A, or prime office space which is usually air-conditioned and recently built, is in chronic short supply in the city.
Oxford Science Park is now full and there have been no significant new buildings for years thanks to the impact of the recession.
Companies such as Pipers Crisps, which wants to set up a new 5,000 sq ft distribution depot inside the Oxford Ring Road, has been looking for a combination of mixed office and warehouse space for two months.
Managing director Simon Herring said: “There isn’t a massive amount of good new, or even newish units out there.
“We have been hunting all around Oxford and even outlying towns, such as Thame, for weeks now.
“There are a lot of old, scruffy places but no quality space.”
Property agent Savills’ Market Watch report, which monitors commercial property in Oxford, found the amount of office space let last year was 131,002 sq ft, 23 per cent up on the year before.
That figure was boosted by online travel giant Trip Advisor, which brought together staff from Summertown and Cowley to the Oxford Science Park in two deals.
Its decision to take the 31,500 sq ft Hinshelwood Building was the biggest office letting in the city last year.
Average rent levels are £24 per sq ft for grade A office and £8.50 for quality industrial space but lack of supply is likely to push these higher.
Nick Berrill, director of business space at Savills, said: “There has been no new building for the past five years, which means stock has not been expanding and the grade A space has all been filled.
“With renewed confidence coming back, hopefully developers will look at refurbishment or new builds.
“There are companies enquiring about office space who are going to find it very difficult to find the right opportunity and they will have to compromise.”
Martin Conway, of property agents Marriotts, added: “As things improve and rents go up, developers will start building again.
“Around the M25 and Birmingham, warehouses are being built again, so it’s likely Oxfordshire will also see developers looking seriously at schemes here and perhaps in Bicester and Banbury.
“But ultimately, it’s a question of sites being available to develop and developers having the appetite for it.”