OXFORDSHIRE 2018 - Carter Jonas
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OXFORDSHIRE 2018
COMMERCIAL EDGE OXFORDSHIRE
THE ECONOMIC SUCCESS FOCUS ON
OF OXFORDSHIRE HAS BEEN INVESTMENT
PRIMARILY DRIVEN BY THE
KNOWLEDGE SECTOR. THIS
IS REINFORCED BY THE
FACT THAT THE EDUCATION
SECTOR ACCOUNTS FOR
OVER 7% OF THE COUNTY’S
ECONOMIC OUTPUT. THIS HAS
HELPED IN PRODUCING A GVA 2ND
PRODUCTIVITY FIGURE PER FASTEST GROWTH
CITY RANKING
WORKER THAT IS 17% ABOVE (UK 2018)
THE NATIONAL AVERAGE.
£71,641
The result of this is Oxford being ranked as 2nd in the
Fastest Growth City Ranking and ranked first on the
GROSS VALUE
Good Growth for Cities Index. This growth is further
ADDED (GVA)
supported at a macro level by the Government’s PER WORKER
Industrial Strategy and the commitment made in the (UK £61,444)
Autumn Budget to invest £215 million in Oxfordshire
on vital infrastructure projects. Long awaited plans
to redevelop the central Oxford train station are 98.7%
considered crucial to future prospects. SUPERFAST
Oxford itself has witnessed above average
economic growth over the last five years (3.4%pa
BROADBAND
average), with 2017 seeing economic growth of 2.7%. COVERAGE
2018 is expected to see reduced economic output at (England 95.2%)
2.2%, but this is still well above the national average.
OX EN
The strong economic growth has translated into F G
OR
LA
particularly healthy employment growth. During 2017 98.7 95.2
D
ND
employment growth was 2.0%, compared to 1.3% % %
nationally. Employment growth is expected to slow
down throughout 2018 after the sustained growth
seen over the last five years, although the demand for
48.6%
almost 1,000 FTE jobs is anticipated in 2018.
Consumer expenditure in Oxford grew by 2.0%
across 2017. Growth is forecast to be lower across BUSINESS
2018, at 1.3%, but still noticeably above the national SURVIVAL
level. In fact, disposable income per head in Oxford is
RATES
36% above the national average.
(% after 5 years)
(England 44%)
2
Figure 1 Oxford GVA
Source: Experian
6.0%
5.0%
4.0%
3.0%
2.0%
Property investment activity planned to happen within the county. 1.0%
in Oxfordshire has generally The Oxfordshire Local Enterprise
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15
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17
18
19
20
been static due to lack of stock, Partnership (LEP), for example,
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20
20
20
with approximately £190 million has been identified as the most
of deals completed across 2017 successful LEP in attracting office
compared to £307 million in occupiers, and Oxford is classed as
2016. These figures do however a Top 10 City by Nesta for inward
THE OXFORDSHIRE LEP HAS
exclude Hermes’ sale of a capital investment. The LEP has also
BEEN IDENTIFIED AS THE
50% equity stake in MIlton Park achieved year-on-year growth over MOST SUCCESSFUL LEP IN
for a reported £200 million the last five years in terms of foreign ATTRACTING OFFICE OCCUPIERS
which falls outside of our direct investment successes. This has
investment criteria. assisted in delivering over 40,000 Figure 2 Oxfordshire Commercial
jobs in the county since 2011 – half Investment Volumes
The industrial sector saw investment of the 2031 target.
£ million Source: Property Data
trading in excess of £70 million, A range of further actions are
400
driven primarily by four large deals being promoted by the LEP and
in Banbury, Didcot and Faringdon. key local stakeholders to include 350
These were delivering yields of the agreement of a Local Industrial
between 5.5-6.5%. Activity was Strategy, developing the Oxford- 300
focussed in the first half of the year. Cambridge Arc initiative, investing
250
Retail investments totalled just and expanding the Science Vale and
over £30 million in 2017. This was Didcot Enterprise Zone, and rolling
200
driven by two deals in particular, out the Government-supported
Waitrose in Banbury and Yarnton Oxfordshire Transformative 150
Nurseries in Kidlington. Yields Technologies initiative.
remained tight on many transactions, Whilst this increase in activity over 100
at around 4.5%. the past few years has and continues
50
Interest in property investment to result in key gains, equally there
across Oxfordshire has also driven by remains much to do in terms of local 0
the wider infrastructure investment investment in infrastructure and
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9
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20 1
12
13
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15
16
17
1
0
0
that has been happening and is housing particularly.
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carterjonas.co.uk 3
COMMERCIAL EDGE OXFORDSHIRE
BALANCING THE STATS
Three dimensions of a ‘balanced city’ are outlined below. Comparing Oxford’s performance
to the national average allows us to consider the affluence of the city.
ECONOMICS
PROPERTY
GVA GROWTH 2017 OFFICE SUPPLY/DEMAND RATIO (YRS SUPPLY)
2.7% 1.7% 1.4 5.2
OXFORD NATIONAL OXFORD NATIONAL
EMPLOYMENT GROWTH 2017 INDUSTRIAL SUPPLY/DEMAND RATIO (YRS SUPPLY)
2.0% 1.3% 1.3 13.9
OXFORD NATIONAL OXFORD NATIONAL
BUSINESS SURVIVAL RATES (% AFTER 5 YEARS) RETAIL SPEND PER SQ FT
48.6% 44.0% £11,839 £10,739
OXFORD NATIONAL OXFORD NATIONAL
PROSPERITY
INCOME PER HEAD 5+ A*-C GCSEs ACHIEVED
£25,646 £18,793 49.8% 57.8%
OXFORD NATIONAL OXFORD NATIONAL
EDUCATION GVA OUTPUT (% ECONOMY) LONG-TERM UNEMPLOYED (2016 - %, 1 YEAR+)
7.1% 0.6% 1.2% 3.7%
OXFORD NATIONAL OXFORD NATIONAL
HOUSE AFFORDABILITY RATIO LIFE EXPECTANCY (YEARS)
12.1 11.9 82.5 81.3
OXFORD NATIONAL OXFORD NATIONAL
COMMERCIAL EDGE OXFORDSHIRE
OFFICE/LAB Office take-up in 2017 across
Oxfordshire totalled 586,000
MARKET sq ft, representing the highest
recorded level over the past
decade and a notable increase
against the 2016 figures.
Oxford’s knowledge-based
economy has been the primary
driver of this growth, with
approximately 74% of the
recorded transactions involving
£30.00 companies operating in the life
sciences and technology sectors.
OXFORD OFFICE
RENTS (psf) Q4 2017 Activity has been concentrated on
the County’s three main science and
technology hubs - Oxford Science
OXFORDSHIRE Park, Milton Park and Harwell.
OFFICE TAKE-UP Speculative development at these
(2017) hubs will be delivering 206,500 sq example, had a much subdued share
ft in Q1 2018. Much of this stock is of transactions due to shortage
expected to be committed prior to of supply. Nevertheless, we have
completion. continued to see an increase in rental
OXFORDSHIRE This activity has not been tone generally within the County’s
OFFICE SUPPLY widespread throughout the County, remaining stock, driven partly by lack
(End 2017) however. Oxford City centre, for of supply but also through landlord
investment.
With no new additions to the
Figure 3 Office & Lab Take-up Figure 4 O
ffice Rental Levels, 2017 development pipeline in the past
Source: Carter Jonas Source: Carter Jonas Primary Secondary 12 months we anticipate greater
sq ft £psf take-up of second-hand stock over
600k 35 the next 12-18 month period. In the
short-term, further announcements
30 are expected regarding Oxford
500k
North (formerly Northern Gateway)
25 and Oxpens, albeit the first phase
400k
of this latter scheme is likely to be
20 residentially driven.
300k We have previously reported
15 that the Oxpens scheme in Oxford
200k City centre may act as a catalyst
10 for rental growth. However, with the
rental tone for the prime schemes
100k
5 now having passed the £30.00 psf
mark, to a large extent the re-basing
0 0 of the County’s prime rental tone has
already taken place.
10
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15
16
17
n
ry
r
t
d
e
ey
te
co
am
do
or
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bu
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itn
es
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5INDUSTRIAL
MARKET
£10.50
OXFORD INDUSTRIAL
RENTS (psf) Q4 2017
OXFORDSHIRE
INDUSTRIAL TAKE-UP
(2017)
The Oxfordshire industrial build element is accounted for in
OXFORDSHIRE market recorded take-up activity DB Symmetry’s larger Banbury and
INDUSTRIAL SUPPLY totalling 1.42 million sq ft in Bicester schemes. Equally, however,
(End 2017) 2017. This is approximately 5% there is a welcome return to small
down on 2016 figures. These and mid-range development, such
figures show a mixed occupier as at Link 9, Bicester and Foxcombe
Figure 5 Industrial take-up by year profile, with no one sector Court, Abingdon.
Source: Carter Jonas dominating. However, it does Rental tones have, on the whole,
sq ft include a number of science continued to harden throughout the
1.5m based ‘industrial’ buildings, County with modest increases on
such as the new Zephyr scheme most new build schemes. Capital
at Harwell. Geographically, values have risen considerably. Link
1.2m
although Banbury and Bicester 9’s latest transaction in Q4 2017, for
account for the majority of example, is showing reported values
0.9m
transactional activity, the spread of £128.00 psf.
has been much wider than Excluding option activity, the
previous years with notable future pipeline is largely unchanged
0.6m successes in Abingdon. with only Albion Land’s hard
fought for Howes Lane scheme
Availability has increased at Bicester being a new entry.
0.3m substantially to 1.84 million sq ft. Otherwise existing schemes supply
This increase is partially driven by the is diminishing as take-up continues.
new build schemes, which comprise The Howes Lane scheme totals
0
approximately 477,000 sq ft of the 51.2 acres and can accommodate
11
12
13
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15
16
17
total. A large proportion of this new- 570,000 sq ft of industrial stock.
20
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20
20
20
20
20RETAIL
MARKET
£300.00
OXFORD
RETAIL RENTS
(£psf ZA) Q4 2017
Oxford remains the dominant and convenience food outlets taking
49% force in the Oxfordshire retail
landscape. The City is an
the place of traditional high street
retailers in this area.
INDEPENDENT
attractive retail centre with a Current Zone A rents remain
RETAILERS strong historic, cultural and unchanged with Cornmarket at
I ND educational offering, attracting around £300psf (ITZA), Queen
over seven million visitors a year Street at £230psf and the top of the
EP
49
ENDEN
and generating £780 million High Street at about £200psf. Lease
%
S
worth of income. terms for the Westgate have been a
ER
T
RETAIL
closely guarded secret. However, we
Our 2017 report focussed on the understand the Westgate is breaking
Westgate Centre, including the with tradition, granting leases on
+2.0% potential negative impacts it may terms as short as 5 years ensuring
CONSUMER have on the remaining City retail occupiers will have to earn their
EXPENDITURE 2017 scene. There have, indeed, been a place in the shopping centre or risk
number of notable existing occupier their lease not being renewed. Rents
moves to the Westgate, including are rumoured to be at an equivalent
Next and River Island. However, £240 psf (ITZA).
given the relatively strong level of Outside Oxford the expansion
known occupier requirements and of Bicester Village, owned by Value
limited unit availability, we consider Retail, has seen the addition of 30
it reasonable to assume that the new stores (total 160) to the scheme.
THERE HAVE BEEN longer term prospects for the City Also on the approach to Bicester,
A NUMBER OF remain strong. This view is backed up Consolidated Property Group have
NOTABLE EXISTING by current footfall figures showing achieved outline planning for a new
OCCUPIER MOVES a 11.9% increase in January 2018 retail park totalling 100,000 sq ft
TO THE WESTGATE, to the equivalent week in 2017*. of prime retail space with the main
INCLUDING NEXT It is evident from new arrivals in occupiers being Marks & Spencer
AND RIVER ISLAND. Cornmarket that there will be a and with the scheme incorporating
partial change in retailing focus with a new gym, restaurant and hotel.
*Source: Oxford City council a number of tourist driven retailers Completion is targeted for late 2018.
carterjonas.co.uk 7COMMERCIAL EDGE OXFORDSHIRE
THE TRENDS PRIME RENT
(END 2017)
CHANGE
OVER 2017
FORECAST
2018
PRIME YIELD
(END 2017)
Office £30.00psf 5.5%
OXFORD
VALUES Industrial £10.50psf 5.5%
Retail £300.00psf ZA 4.0%
CURRENT
2017 TAKE-UP CHANGE CHANGE
AVAILABILITY
(SQ FT) OVER 2017 OVER 2017
(SQ FT)
OXFORDSHIRE Office 586,000 843,300
BUSINESS
SPACE ACTIVITY Industrial 1,420,000 1,840,000
SPOTLIGHT ON:
UNIVERSITY SPIN-OUTS
Although the University spin out spin out companies accelerate their Strong demand from University
is not a new phenomenon, the development programmes with the backed spin outs is forecast to
past three years in particular benefit of this capital and expertise continue well into 2018/19 and
have seen a marked increase and move into both conventional and translate into take-up in the
in spin out investment, with a lab accommodation. Oxfordshire office market. The
range of investment vehicles Since formation OSI has invested related challenges arising for
concentrating on this sector, in over 45 spin out companies across landlords is their ability and capacity
including Lansdowne Partners the technology and life science to deliver high specification office
and Woodford Investors, sectors. Most recently Diff Blue, an accommodation, capable of fit out for
amongst others. AI company, with a 2017 $22M Series dry and wet labs for companies rich
A funding from Goldman Sachs, OSI in funding but with unproven trading
The most high profile of these and The Oxford Technology and and unknown future property needs.
however is Oxford Sciences Innovations Fund, has leased 15,000 Oxfordshire boasts a wealth of
Innovation (OSI), launched in 2015 sq ft of city centre accommodation. established success stories within the
in partnership with Oxford University In 2017, The Oxford Science Park spin out sector, with the examples
to provide capital and scaling attracted EvOx Therapeutics to of Oxford Nanopore, Adaptimune,
expertise to businesses driven by the Park, whose mission statement Immunotec and Immunocore alone
intellectual property developed in is to create novel exosome-based accounting for 240,000 sq ft of
Oxford’s Mathematical, Physical, biotherapeutics for the treatment of take up in 2017. It will be interesting
Life Sciences and Medical Sciences various severe diseases. EvOx was to follow the newest crop of
Divisions. one of three biotech companies that companies whose rise, or fall, could
This in turn is now resulting in secured a combined total of £37m come about quicker given this
tangible take-up activity as the from OSI in one round of fund raising. increase in funding activity.
8FORECASTS
espite the uncertainty surrounding the impact of Brexit, in
D
general terms Oxfordshire’s immediate future appears strong.
This is primarily linked to the rapid growth in knowledge based
industries but also the related prospects presented by Oxford
spin out companies.
In the industrial market, limited stock and demand for new built
stock will encourage further development, where opportunities
allow. In turn, this will be bolstered by the improvement seen in
rental and capital values.
In the retail market we will see a number of schemes progressed
during 2018 in the wider market place, whilst in Oxford city centre
we expect a period of transition as those moving to the Westgate
do so and new entrants take their place. Whilst there may be
some initial pressure on rental tones equally there is an argument
for longer term improvements as the City’s footfall increases.
In summary, we have reason to be optimistic for the County’s
prospects over the next 12 months.
carterjonas.co.uk
carterjonas.co.uk 938 OFFICES ACROSS THE COUNTRY,
INCLUDING 13 IN CENTRAL LONDON
Bangor Newbury
Basingstoke Northampton
Bath Oxford
Birmingham Peterborough
Boroughbridge Shrewsbury
LONDON Cambridge Suffolk
OFFICES Edinburgh Taunton
Harrogate Truro
Kendal Winchester
Leeds York
Marlborough
National HQ One Chapel Place Knightsbridge & Chelsea
Barnes Marylebone & Regent’s Park
Barnes Village Mayfair & St James’s
Fulham Bishop’s Park S. Kensington & Earl’s Court
Fulham Parsons Green Wandsworth
Holland Park & Notting Hill Waterloo
Hyde Park & Bayswater
CARTER JONAS Contacts:
Carter Jonas LLP is a leading UK property consultancy working Catherine Penman Head of Research
across commercial property, residential sales and lettings, rural, 01604 608203 | catherine.penman@carterjonas.co.uk
planning, development and national infrastructure. Supported by
a national network of 38 offices and 700 property professionals, Scott Harkness Head of Commercial
our commercial team is renowned for their quality of service, 020 7518 3236 | scott.harkness@carterjonas.co.uk
expertise and the simply better advice they offer their clients.
Jon Silversides Head of Oxford Agency
Find out more at carterjonas.co.uk/commercial
01865 404458 | jon.silversides@carterjonas.co.uk
Our services: 01865 511444
Agency Investment Mayfield House, 256 Banbury Road,
Oxford OX2 7DE
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oxford@carterjonas.co.uk
Asset Management Masterplanning & Design
Building Consultancy Planning To view the data sources of the Commercial Edge research series, please
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© Carter Jonas 2018. The information given in this publication is believed
Consultancy & Strategy Research to be correct at the time of going to press. We do not however accept any
liability for any decisions taken following this publication. We recommend
Development Consultancy Valuations that professional advice is taken.
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