Corporate investment in Oxford – H1 2019

In total, corporate investment in Oxford totalled £532 million in the first half of 2019. Of this total, a significant 88% of the deals were related to the life science sector, which included companies involved with pharma, biotech, devices, oncology, specifically and digital health.

Early and later stage fundraising, for start-up and scale-up life science companies, usually involves venture capital (VC) funding. Capturing and assessing the opportunities of this type of corporate investment is important to track the growth and formation of companies. Reviewing the scale of VC is a key indicator of the underlying growth prospects for new and establishing companies. In total, during the past five years, just over £827 million has been recorded as VC for the Oxfordshire region. This quantum of VC will create headcount growth as the companies begin to scale in a meaningful way. This higher volume of VC will eventually translate into office, laboratory and industrial demand in the city and surrounding areas, including the science and business parks.

During H1 2019, Oxford(shire) has seen just over three-quarters of ‘life science’ corporate investment head into devices; biotechnology accounted for just over 11%.

Analysis of life science funding must go beyond the UK. This is why Savills, with its global network, has visibility on the future drivers of demand. There is a clear need to look beyond the region and the UK to understand the prospects and identify future drivers. The chart below shows £7.7 billion of life science VC fundraising in the first half of 2019 in eight key global locations. The UK ‘golden triangle’ is only 13% of the total shown and, combined, lower than Shanghai alone and was 62% lower than the total for Boston/Cambridge, US.

Office market summary

At the end of the first half of 2019, take-up in the Oxford office market was around 125,000 sq ft, but there are deals in the pipeline that will result in the city posting take-up around the half-million mark by the end of the year.

Pharmaceutical, medical and healthcare-related deals account for half the market. We expect to see top rents grow by 3.6% during the forecast period, as top rents hit £40 per sq ft for 2019. Smaller deals will see rents above this level, some of which will be driven by those companies that have fundraised during the past six months. Growth in rents will occur this year and next, but then pause for a year, in 2021, as new office supply feeds through to meet increasing demand from existing occupiers and new entrants into the city.