Demand for industrial and logistics property in Cambridge will continue to be driven by mid-tech and research & development occupiers.
The market is, however, severely hampered by a lack of supply of good quality units with secondary stock dominating.
In LSH's Cambridge Industrial & Logistics H1 Market Review, Nick Thompson, Surveyor in our Cambridge office said: "With continued demand for prime space, many occupiers are now being forced to consider alternative options."
First speculative build in three years
He said: “The current lack of new build and good quality second hand stock has led to the construction of the first speculative unit for three years, at Evolution Business Park. Occupiers looking for good quality space will either have to enter into build to suit agreements or carry out extensive refurbishment works on a suitable unit.”
Take-up in Cambridge and the surrounding area at the half year stage was 245,189 sq ft – a 56% decrease on the same point in 2102 when take-up reached 436,212 sq ft. This decline was caused by a lack of transaction in the big shed market, while the smaller end of the market held up well, said Nick.
Total number of deals up on last year
Despite this, the total number of deals in the first half of 2013 was 56, up on the half year figure of 46 transactions in 2012. The largest deal was the letting of the 17,545 sq ft Unit 4b, Cambridge Commercial Park, to Conductive Inkjet Technology at £6.50 per sq ft. Demand for units of less than 10,000 sq ft accounted for 87% of activity.
Nick said supply in the region had increased by 3.5% to 1,741,014 sq ft largely due to the Orchard Farm, Foxton, and Unit 17-20 Greenfield, Royston, coming to the market providing 51,146 sq ft and 60,970 sq ft respectively. Second hand stock accounts for 915 of current supply, with 71% of this consisting of units of 10,000 sq ft and under.
Demand for prime space will continue
He added: “Looking to the future, demand is likely to continue to be driven by occupiers looking for prime space – particularly mid-tech and R&D occupiers. Prime rents and headline rents for good secondary stock will remain stable with fewer incentives being offered due to the lack of supply.
“Incentive packages for poor secondary stock will continue to be good for occupiers due to an over supply in this sector, and we expect further speculative development to be dependent on pre-letting part of the schemes.”