Record Occupancy Levels Fuel Growth in Oxfordshire's Flexible Office Market
Occupancy levels in serviced office and co-working space across Oxfordshire are at an all-time high according to a recent review carried out by leading commercial property agents, VSL & Partners.
The flexible office market has, for over 30 years, provided growing businesses with an effective alternative to the traditional office. The rise in start-up culture, the rocketing demand for short-term lets, and the OxLEP’s investment funding is fuelling further growth in Oxfordshire, with two new centres just opened and a further two to open in the next 18 months.
The VSL review carried out in December 2016, investigated the serviced and innovation centre market in Oxford and Oxfordshire. The report uncovers 42 different centres providing a total of 502,000 sq ft of flexible office space, of which 45% is located in and around Oxford. The largest provider is Oxford Innovation with 110,000 sq ft (22% of the total space).
The report finds that the average size of a centre is 14,000 sq ft. Over 25 centres were contacted with all reporting occupancy rates of between 85 and 100% and many reporting a waiting list.
Richard Venables, director of VSL & Partners says: “Not so long ago, serviced offices were considered a fringe element of the commercial property industry, suitable as a stepping-stone for startups and small businesses. But as the sector has grown, so too has its reputation as a sustainable workplace model for all sizes of businesses, including large corporations. Couple this with the growing number of start-up companies in the county and the potential for further growth in this sector is huge.”
“The attraction for business is that these facilities offer flexible licence arrangements which allow for growth and contraction and also the benefit of a fixed all-inclusive package to contain costs.’’
From start-ups to multi-national corporations, Oxfordshire continues to attract some of the brightest entrepreneurial brains and is noted as one of the five top Technology Innovation Ecosystems in the word, with more than 1,500 high-tech companies employing some 43,000 people.
According to figures released by StartUp Britain, the campaign group for entrepreneurs, there were 4,544 new companies created in Oxfordshire in 2015 this includes Oxford, South Oxfordshire, West Oxfordshire, Vale of White Horse and Cherwell. 2016 figures, released on 16th January 2017 show that across Britain more than 650,000 new ventures were founded, a rise of almost 50% on the previous year. 2017 is expected to be another record-breaking year.
The Oxford and Oxfordshire City Deal announced in 2014 allocated £30m Government finance and £37.5M private sector match funding for the development of four innovation hubs in Oxfordshire to support the county’s increasing number of innovative start-ups and university ‘spin-out’ companies.
This summer saw the opening of the first two at:
•The Begbroke Institute of Advance Technology - providing 20,000 sq ft of wet/dry lab and office space
•The Culham (RACE) Remote Applications in Challenging Environments facility - 30,000 sq ft of mixed engineering space
A further two centres are set to open in 2017:
•The Oxford BioEscalator, Old Road Campus, Headington which will provide 15,000 sq ft of innovations space within the world’s leading medical research hub to catalyze the commercialization of clinical research.
•Harwell Innovation Hub. A 40,000 sq ft innovation centre and amenity facility within a new building called The Quad.
Despite this huge investment into providing new homes for early stage companies, availability in Oxford is still very constrained according to the “Oxfordshire Innovation Engine Update” report published by OxLEP in May 2016. Equally the Oxford City Council “Oxford Economic Growth Strategy” published in 2013 also identified the need for greater innovation space in the city.
The OxLEP has identified five key business growth clusters in Oxfordshire which include: life sciences, electronic sensors, automotive engineering, creative, and digital and space. The challenge moving forward will be to meet the requirements of these businesses which have diverse operational requirements including the need for lab and starter workshop space. Even with the addition of the four new innovation hubs there is still limited supply to meet the current demand. The lack of new office development over recent years and the shrinking supply of space has means opportunities for new innovation or serviced centres are scarce. Not all buildings are suitable as they need to be capable of easy subdivision and new buildings often lead to prohibitively expensive rental costs.
A recent study by property academics* states the UK serviced office market overall could grow from the current £16bn to £126bn by 2025. It also says that the UK is the largest and most mature serviced office market globally, having grown by 31% since 2008. With approximately 2,300 serviced office centres nationally, the UK accounts for 36% of the international market.
“With national growth in the serviced office market in mind, the current occupancy rate in Oxfordshire and the ongoing growth in the science and innovation sectors in the county, flexible working is clearly here to stay. Those landlords who embrace the opportunities for growth in this sector, and adapt their thinking and space accordingly, will inevitably reap the reward“ says Richard.
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