Insight: Alex Bloxham, head of residential lettings at Bidwells, takes a look at the Cambridge lettings market and the impact of the region’s prowess in science and technology.
Charlotte Grainger is 37, she has recently moved with her family to Cambridge. She works as a senior engineer for MathWorks, who have expanded their office space in the city. Her husband also works in the science, tech and innovation sectors, as a director for AstraZeneca. Their daughter is just starting at their local secondary school. Charlotte and her family relocated from Massachusetts the US, when the opportunity came up to be part of MathWorks UK expansion and the leafy, university city of Cambridge was deeply appealing.
Charlotte is fictitious; however, her profile matches the renters for whom Bidwells find homes every day. While Cambridge has experienced very similar drivers to the UK market, the city’s rental market is highly influenced by its unique economic structure with a particularly high proportion of residents working in the areas of science and technology. This is reflected in the local market demand, in terms of both incomes and the profile of the tenant base. Over the last three years, two thirds of Bidwells lettings have been to households working in science, tech or associated medical roles.
Approximately half of Bidwells’ lettings in 2023 were to international tenants.
Over the last decade, the highly productive Cambridge economy and restricted market size has positioned the city as one of the strongest residential markets in the UK, with averaged annualised value growth of 6.5 per cent pa. The average home in the core Cambridge market stood at £480,000 at the end of 2023, while the average prime property was in excess of £500,000.
Average residential price growth since 2000 – Cambridge 348 per cent, UK 234 per cent
That growth is set to continue…
Advanced therapeutics is just one area of science that is currently in its early growth stage. Emerging scientific areas such as optogenetics (light technologies), quantum computing or biological computer chips are likely to be commercialised over the next two decades and Cambridge is positioned to take a leading role. Such companies grow quickly. As we have seen with the letting and growth of companies including Arm, MathWorks, Microsoft, Amazon and AstraZeneca, this letting will be reflected in rental demand in Cambridge over the long term.
Despite the financial challenges facing development at present, Cambridge will see the delivery of approximately a million square feet of office and laboratory floorspace over the next couple of years. Much of the space coming through in the next year is under offer or is in advanced discussions with occupiers. The potential of the Cambridge cluster will be unleashed further over the coming decades.
Now we come to a word of caution courtesy of our Gini. The Gini Coefficient measures inequality in a location and is a useful gauge of how effectively a town or city is distributing its resources. When locations grow fast it is challenging to keep pace with infrastructure, schools, medical facilities and all the elements that keep communities safe and well, and university cities often score poorly.
The Gini Coefficient ranges from 0 to 1, with zero meaning that wealth is distributed equally and 1 indicating high wealth inequality. San Francisco, for example, has a coefficient of 0.500, a number that readily translates into what you see on the streets of the city everyday with homelessness and soaring rents.
University cities, like Cambridge tend towards income inequality as they attract new residents, often with higher paid jobs and price out existing communities. In 2022 the Centre for Cities cited three elements necessary to support future growth:
\- Continue to manage the costs of growth – maintain supply of housing in the right places for demand.
\- Match improved transport and other infrastructure demand with greater density of development.
\- Be agile to changing requirements of commercial space – tracking trends on what companies need and where.
By tracking and sharing the localised demand and supply data we compile on both commercial and housing trends to understand who is living, working, studying, and migrating to Cambridge and its wider hinterland - people like Charlotte - we are in a better position to plan appropriate homes in communities where growth can be supported. And support Cambridge in its future growth.
