While news headlines are focusing on the demise of the retail sector, a report launched this week by local property expert VSL, shows other areas of Oxfordshire’s commercial property market have been remarkably resilient to the impact of the pandemic.
The VSL INTEL annual report, which goes back to 2002, provides an analysis of the office and industrial market, focusing on central Oxford and the A34 ‘Innovation Knowledge Corridor,’ for offices from 3,000 sq ft and above and industrial from 5,000 sq ft and above.
VSL reports that the Oxfordshire industrial market recorded its best-ever year for demand with 1.26 million sq ft of space taken up. The industrial market has particularly benefited from growth within the online retail distribution and warehouse sectors as well as the continued growth in the science and technology markets. Take-up was fuelled by new stock supply on several new speculative schemes created in the last year. Bicester was notably the main focus of take-up, accounting for 50% of all transactions. The average transaction size increased during the year by 18% to 25,800 sq ft.
Office transactions also increased by 20%. Take-up was recorded at 324,700 sq ft which put into context of recent years, is on par with the five-year average. The report notes another feature of 2020 is the acceleration of rents achieved at a time when many would predict an easing on the gas during this period of uncertainty. A limited supply of quality stock and competing users are driving this growth.
Richard Venables, director at VSL explains: “Despite the siren calls for the ‘death of the office’, we haven’t seen a dump of office stock, although a number of businesses are looking at consolidation. It is only once we adjust to the ‘new normal’ that businesses can really assess their needs, the social interaction the office environment provides will never disappear. As one client recently commented – the office hasn’t died, just evolved!
“Oxford has been synonymous with hope in 2020. The global spotlight on Oxford and the cutting-edge research carried out here has already had an impact on the commercial property market. Many landlords and developers are now looking at vacant property and thinking about how these can be adapted or ‘re-purposed’ for science and technology use.
“Investment is pouring into the region both in terms of funding for research and property investment and development. This bodes well for exciting times ahead and Oxfordshire needs to rise to the challenge of meeting these opportunities.”
Co-director Tom Barton adds: “New build office activity is still limited and will continue to be so for some years to come. Refurbishment and re-use of space will bring more stock to the market and this will inevitably also include former retail space. The industrial market has been more active with the development of a record amount of new space over the last three years. This pace of development will undoubtedly reduce in coming years, mainly as a result of the pipeline of development sites drying up.”
In 2020 VSL was involved in 55% of all industrial transactions and 46% of all office transactions in Oxfordshire and was named as Oxfordshire’s most active agent and dealmaker of the year for the 11th time by Estates Gazette Interactive (EGi).