Brexit has so far failed to dampen demand from the tech sector for space in Cambridge. And a new devolution deal promises solutions for the city’s undersupply and inadequate infrastructure
A university town in an idyllic setting, Cambridge has long been associated with students and tourists punting down the lazy, willow-strewn River Cam. People would be forgiven for considering it a sleepy city with a colourful heritage, a mecca for academic study where young brains are nurtured until international capital cities snap them up.
But Brookgate’s CB1 redevelopment, which is set to deliver 26 acres of offices, shops, restaurants and public realm near the city’s train station, is a conspicuous reminder that Cambridge has established itself as a powerhouse for innovation and excellence, leading the way in technology and bioscience sectors.
An recognised research and development hub, burgeoning cybersecurity hotspot and a preferred location for start-ups, the city and its surrounds have earned the nickname “Silicon Fen”.
With a population of just 125,000, Cambridge has become a magnet for global tech giants such as Apple, Microsoft and Spotify.
The city, which now employs 18,532 people in the digital sector, recorded a 46% jump in new tech companies between 2010 and 2013, according to the Tech Nation Report 2016 by Tech City UK.
The attraction is clear: Cambridge is home to one of the best universities in the world and its ready talent pool of some of the brightest minds has proven impossible for businesses to resist. Last year the city logged a record 1.1m sq ft of office take-up.
But the Brexit shockwaves that rippled through the region resulted in concerns over the delivery of infrastructure projects and reduced research funding.
The business community harboured fears that a tougher Brexit stance on immigration might be detrimental to a diverse workforce and international collaboration, and fuelled concerns that the UK might lose its top seat to influence research.
Can Cambridge insulate itself from these tremors?
Robust demand
The city’s property industry seems to think so. Office take-up in the first half of 2016 was 175,300 sq ft and robust demand is continuing, with around 1.2m sq ft of requirements.
Steven Harvey, associate at Cheffins, points out that although the level of enquiries has dropped, occupational activity has not slowed.
“Nobody thought we would vote leave, and it was a bit of an excuse to put the brakes on. So when it did happen, we felt quite concerned. When there is an upset in any market, property is the first to be hit,” he says.
“That was the initial thought. But having said that, it hasn’t slowed down at all.”
These high levels of demand are occurring in an already constricted market – Cambridge’s historic and crowded city centre and bustling business parks are filled to the brim. Office vacancy rates at the end of H1 2016 stood at 595,800 sq ft, of which just 93,100 sq ft was in the city centre, and much of this is in smaller, sub-10,000 sq ft units.
So could it be long-standing challenges, rather than Brexit, that hampers the city’s commercial growth? Could Cambridge be a victim of its own success?
Will Heigham, head of office agency at Bidwells, says that although the topping-out of the John Bradfield Centre, a start-up incubator run by Central Working, will be great for young tech firms when it is operational in June 2017, more supply needs to come on stream.
“The centre will give them a facility for collaboration. But we also act for Trinity College’s Science Park and our phone has been ringing off the hook, all from tech occupiers who want to be in Cambridge for its R&D offer,” he says.
“The business community needs a base to operate from – it is absolutely key. It is being delivered, but once that first development is up and running, it will be filled very quickly and there will be requirements for more.
“This is looking at the smaller end, somewhere to accommodate 20 to 50 people before they can go off and sign a lease for somewhere bigger. But at the other end of the market, if you wanted 20,000 sq ft, your options to get that tomorrow would be only at Cambridge Research Park or Cambourne Business Park.”
Around 400,000-450,000 sq ft of development could potentially be started over the next two years, with completion likely to be beyond 2018, but the likelihood is these schemes will not start without prelets in place.
Crucial connectivity
Digital and physical infrastructure also needs improvement, adds Mike Derbyshire, head of planning at Bidwells. Poor connectivity, congested roads and limited stock to house a rapidly growing workforce all threaten Cambridge’s success.
But there are bright spots on the horizon, in the form of the Cambridge City Deal and the proposed devolution deal (see box). A combined authority and newly elected mayor could be able to meet some of these challenges head on.
Derbyshire says: “The devolution agenda is focused on housing. The £70m potentially invested in affordable housing in the city is a huge boost and gives the devolution some teeth.
“The problem is that when you are attracting companies such as AstraZeneca, it’s not just about having a site that can accommodate 2,000 people. It’s about where the schools and homes are and the whole piece, particularly if you are talking to tech companies.
“They are looking at Cambridge on a global scale, comparing it with cities such as San Francisco. So it’s the whole package, internet, infrastructure and homes. There is huge room for improvement in digital infrastructure. The transport infrastructure requirements in the south of the city are hugely significant and I don’t think they have yet been crystallised.”
Derbyshire adds that the main problem with devolution is the unlikely bedfellows it would make of a Conservative South Cambridgeshire District Council and a strong Labour Cambridge City Council, which could cause tension.
“But they will have to work together for the greater good,” he says.
The City Deal agreement set up with central government will provide up to £500m funding over the next 15 years, of which an initial £100m has been secured until 2020 for the first tranche of projects.
According to Sven Topel, chief executive of Brookgate, which is developing the CB1 scheme with Network Rail, one of the key beneficiaries of the deal is the transport schemes that will improve infrastructure.
The City Deal board is considering a workplace parking levy and has agreed travel plans with all the city’s big schools, colleges and employers. These could help to reduce congestion in the city centre.
Topel, who is also a member of Cambridge Ahead, a business and academic group focusing on the growth of the region, says: “The levy has been successful in Nottingham, where it is around £375 a year. It would increase the size of the city centre – creating an exclusion zone in the morning and evening peaks so that within the city it should be easy to move by cycle, bus and taxi.
“It is about spreading the economic benefit from Cambridge, improving the A14 and connectivity. In terms of looking south, along the London and Stansted corridor, those links are also important. The strategy is about making Cambridge a hub and bringing people in sustainably.”
He adds: “We have some of the largest investment opportunities going in the city.”
Philip Woolner, director of commercial property at Cheffins, insists that the long-term prospects for the region are still “terrific” despite the spectre of Brexit and Cambridge’s various challenges.
“While there will be some short-term pain I would expect to see our economy bounce back strongly and quickly,” he says. “In a changing market opportunities will emerge – and these can be exploited to the full. Now is the time to hold your nerve, take stock and then seek the best advice.”
Cambridge’s devolution deal
- The new devolution deal for Cambridgeshire and Peterborough will create a new directly elected mayor for the county and a new combined authority.
- The combined authority would be made up of representatives from all eight councils in the region and a local enterprise partnership.
- The new authority would wield control over £20m a year of new funding for infrastructure as well as £170m for affordable homes; £70m of this will be concentrated on building council houses in Cambridge.
- Cambridge City, South Cambridgeshire District and Cambridgeshire County councils have given their backing to the deal, which will now go out to public consultation over the summer.
- The business-led Greater Cambridge Greater Peterborough Local Enterprise Partnership has also supported the new deal.
