Cambridge is a global success story, but not embracing further growth is likely to impact on its competitiveness, according to new research by Savills. The city continues to face significant pressure on housing, workplaces and infrastructure. Bold decisions need to be made soon in order to enable one of the UK’s fastest growing economies to continue to compete with other innovative cities both internationally and in the UK.
Traditionally characterised by the technology and bioscience sectors and currently home to more than 4,300 knowledge intensive firms employing over 58,000 people, this influx of workers has meant a strong and continual demand for commercial space, which is not being matched by supply. Savills analysis shows that availability of office and R&D space is likely to bottom out next year, having fallen by 90% in the five years to 2017.
Strong employment growth has underpinned the population of the city and its surrounds, which has risen by 11.8% in the 10 years to 2015, compared with the UK average of just under 8%. As a result, Cambridge and South Cambridgeshire has seen employment grow by more than 31% in the same time frame. This has had a major impact on both commercial space and residential values. Employment growth has pushed up the cost of housing, which is now 49% above the 2007/08 peak (on par with London levels), as it deals with a shortfall of more than a 1,000 homes a year.
Susan Emmett, director of research at Savills, comments: “Competing on a global stage, Cambridge could lose out to competitors such as Boston in the US or even UK tech clusters such as Reading due to the acute lack of commercial space and the rising affordability pressures surrounding local housing.”
Savills research shows that the link between salaries and residential prices is vital for Cambridge. When comparing the salaries of scientists employed by three global bioscience companies in Cambridge and Boston, it shows that UK based employees are paid 40% less than their US counterparts. However the cost of housing is broadly similar in both cities. Therefore, the attraction of Cambridge to global companies could potentially recede if housing costs continue to grow.
To keep its competitive edge and meet demand for workplaces and homes, Cambridge needs to make significant changes, says Savills. The options for further growth include increasing densities in existing locations and using space more efficiently, expanding the urban area of the city by altering the inside edge of the Green Belt boundary and utilising existing satellite towns and villages along with creating new ones. The proposed infrastructure changes, such as the guided busway, improvements to the A14, a new Cambridge North station and the planned reconstruction of rail links to Bedford are all steps in the right direction for increasing capacity and opening up new sites for development.
Rob Sadler, head of office for Savills Cambridge, comments: “There is no doubt that Cambridge needs to evolve in order for it to continue to grow. There is a risk that failure to tackle these pressures could constrain growth of existing companies, impacting on the city’s attractiveness to future employers, ultimately resulting in a skills shortage as jobs and talent go elsewhere. Solving the problem requires a joined up approach between Cambridge and the local authorities, setting out the challenges and exploring ways in which we can work together to future-proof our city.”
Read the full Cambridge cross sector report here