An overview of the commercial property market in Oxford

The commercial property market is Oxford has been characterised by a rather stable relationship between demand and supply. However, the latest data published by Meeson Williams Chartered Surveyors reveal a change in this long-standing trend. Researchers found that there has been significant disparity between supply and demand in Oxford during the third quarter of 2012. Currently, supply figures are at their lowest since 2010, and they have been falling for three consecutive quarters.

Meanwhile, demand has grown by almost 50 per cent when compared to the previous quarter, although this figure has to be interpreted with caution, as it mainly reflects the dramatic surge in demand for industrial property. Demand for office and retail floor space in Oxford have remained static during 2012.

Most commercial property in Oxford can be found around the following areas:

Oxford Ring Road - This area offers multiple options in terms of office space, as there are several business parks within a few miles of this road. Some of the most renowned are the Oxford Science Park, a 530,000 square feet development, and the Oxford Business Park, which offers both office and warehouse space.

Littlemore Park - A development offering 35,000 square feet of refurbished office space.

Oxford City Centre - The area around Queen Street and St Aldates is considered a prime location for retail floor space.

Westgate Shopping Centre - One of the latest additions to Oxford's retail floor space. Further development is planned, in which case the total retail floor space available at this site would reach 750,000 square feet.

Office space in Oxford

In terms of the cost of headline rents, there has been very little variation over the past decade. Currently, Grade A office space in Oxford averages £22.50 per square foot. Take-up rates in city centre locations experienced a dip of 18 per cent in 2007 but have been slowly recovering since. During the third quarter of 2012, take-up rates for all types of office space in Oxford reached the 100,000 square feet mark, most of which were related to out of town properties.

Another fact that characterises the office market in Oxford is the strong demand (and therefore strong competition) for Grade B office space in the city centre. Low availability figures mean that quoting rents for this type of office floor space are slightly higher than in other towns with similar characteristics.

In terms of availability, recent estimates show that there are approximately 90 properties in the market. However, this figure only emphasises the shortage of good quality office space in the city centre, as most of these properties are located in the outskirts of the city.

The last quarter of 2012 has also seen a decrease in the required size of office units in Oxford. Requirements have gone from 4,475 square feet to an average of 3,153 square feet. A breakdown of the current supply of office space in Oxford shows that 17 per cent is allocated to units of 1,000 square feet or less, 28 per cent to units ranging between 1,001 and 3,000 square feet, 20 per cent to units between 3,001 and 5,000 square feet, 21 per cent to units between 5,001 and 10,000 square feet, and the remaining 14 per cent to units that exceed 10,000 square feet.

Retail space in Oxford

The retail sector in Oxford contributes with more than £800,000 every year to the local economy. The strength of the retail industry in the area has translated into low vacancy rates for retail floor space. Currently, vacancy rates in the city centre stand at 5 per cent.

However, low completion rates for new retail floor space could be a potential problem in the future. With the exception of the Westgate Shopping Centre, no other retail developments were underway in Oxford at the time of writing, so it is believed that a shortage in supply could appear within the next five years. Consultants believe that a possible solution could be to increase retail floor space availability in areas like Cowley and Blackbird Leys.

Rental values in Zone A locations range between £280 and £215, with the highest prices belonging to properties in Cornmarket. In other parts of the city centre, rental prices range between £5 and £7 per square foot. In terms of investment, the initial yields for retail property in Oxford have been calculated at 4.85 per cent.

Industrial space in Oxford

Traditionally, occupiers and investors looking at the Oxford industrial property market have focused on small-sized units of 10,000 square feet and under. However, during the third quarter of 2012 industrial requirements increased to 38,000 square feet, so it can be affirmed that the industrial property market in Oxford is solid and that we have reasons to expect further growth in the medium term.

Demand is particularly high in out of town locations, although lately market analysts have pointed at an increasingly reduced gap between availability of Grade A industrial space and the volume of transactions for industrial units.

According to a 16-year study published by property developers at VSL and Partners, prime rental levels for industrial property in Oxford have followed a slow but steady rising trend, going from £5 to £8.50 per square foot and showing no signs of slowing down.