Research article

A city state of mind?

Abstract

Cambridge has been one of the success stories of the past decade, but there are signs emerging that it needs to adopt new strategies to remain in a position of strength


The Cambridge ecosystem that links entrepreneurs, investors and academics has resulted in the city becoming a leader in technology, life sciences and the emergent tech in between. Over the last 10 years, the value of goods and services produced in the area has grown by 15%. But in tandem, pressures on the local property markets have continued to grow. Office rents are at £38 per sq. ft. per annum, a 52% increase over 10 years, while house prices have grown by 60% over the same period.

The question now is how well Cambridge can respond to these pressures. Are we seeing Cambridge spreading its wings and emerging as a new ‘city state’ dominating its surroundings, or will growth falter if supply can’t keep up with demand?

On the face of it, Cambridge is still a rising star. It attracts investment from around the world, with £8.71 billion invested in 2017 alone, and the pay back is that it produces four times as many patent applications per capita as its nearest competitor in the UK. The Cambridge life sciences cluster alone is made up of more than 430 companies and organisations, and according to a recent report by AstraZeneca contributes about £2.9 billion to the British economy each year.

Are we seeing Cambridge spreading its wings and emerging as a new ‘city state’ dominating its surroundings, or will growth falter if supply can’t keep up with demand?

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The draw of established knowledge intensive companies – the clustering effect – and pool of skilled graduates from the university has led to increasing numbers of companies choosing to be based in Cambridge. According to Cambridge Ahead, the number of businesses based in the city has increased by 31% since 2011. This has placed growth pressures on the supply of office and laboratory space.

In addition, the increased demand for housing as a result of these new arrivals has resulted in the least affordable market outside London, with median house prices holding steady at 13.3 times median incomes. This has led to a slowdown in the market, and increasingly those that can’t afford such high prices are moving further out into a widening hinterland.

Looking ahead

For Cambridge to continue its success, it needs to maintain delivery of commercial space, and improve residential affordability. The relationship with the hinterland will become increasingly important, as it is beyond the city boundaries where the room to grow and deliver more affordable homes can be found. Cambridgeshire has already received a significant commitment from Government (£20 million per annum over 30 years to kick-start economic growth alone) and has restructured itself significantly as a result as part of the March 2017 Devolution Deal.

The Greater Cambridge Partnership (GCP), the local delivery body for a more localised City Deal with central Government, will bring powers and investment worth up to £1 billion over 15 years. The focus in and around Cambridge is primarily on local transport, housing and smart technology initiatives.

Similarly, the new Combined Authority is keen to invest for the future; its proposed Cambridge Autonomous Metro mass transit system seeks to help address the area’s notorious congestion problems. It is innovations like this that will be key to Cambridge’s future, enabling the clusters of high value businesses to be linked to a growing residential sphere of influence.

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