High-quality office space is needed to attract more companies to Oxford, even if this involves adding slightly to workers’ commutes.
According to the What Workers Want 2016 survey carried out by Savills and the British Council for Offices, more than 30 per cent of Oxfordshire respondents are willing to add over 30 minutes to their commute (one way) if they can work in their ideal workplace. When it comes to location, 44 per cent of Oxfordshire respondents preferred a rural office, while only a third would prefer a city-centre office, illustrating the potential popularity of developments on the edge of the city.
Oxford’s office market is already undergoing a transformation in line with this trend. A large proportion of city-centre secondary stock has been converted into student accommodation and residential use rather than being kept for refurbishment. As a result there has been upwards pressure on rents at the remaining buildings: grade A space is currently quoting in excess of £30 per sq ft, with refurbished space quoting £29 per sq ft. This is compared with £18 per sq ft 10 years ago.
So developers in Oxford are turning their attention to the north of the city, an area that is more viable for large-scale development and will provide the answer to the city’s lack of office space, according to Savills new Oxford cross sector research. An example of this is the Northern Gateway area which aims to attract knowledge based industries alongside providing new homes and community facilities. With office take-up forecast to reach record levels of around 500,000 sq ft this year the additional space will prove crucial to alleviating the pressure in the city centre.
Cambridge has provided a blueprint in terms of how an expansive development policy can attract global occupiers. The presence of Microsoft, AstraZeneca and Apple has pushed top rents to £36.50 per sq ft in the city. It is now time for Oxford to follow and attract more global occupiers and talent. This could push rents to £35 per sq ft by the end of the year.
In order to unlock the Oxford office market it is vital that new office developments are of a high quality and well connected. The market is set to have a strong year in terms of take-up and rental growth and it is crucial that momentum in terms of development is maintained.