On Monday, it was announced that Aviva Investors, the asset management arm of the U.K.’s largest insurance company, had committed to an investment of some $320 million for the 26-acre Station Road commercial research development in Cambridge, U.K.

Its partner in the venture is Canada’s Public Sector Pension Investment Board (PSP Investments), one of that country’s largest pension fund managers, with C$168 billion under management.

Aviva’s parent company, Aviva Group, is also a bellwether, with close to $500 billion in global assets under management and a reputation as one of Europe’s largest managers of real assets (real estate, infrastructure and private debt).

Silicon Fen

The size of the transaction suggests a bullish outlook for Cambridge property—even post-eventual Brexit—as the venerable town retools itself as a global hub for artificial intelligence research.

Upon publicizing the deal, PSP and Aviva jointly hailed Cambridge as “one of the U.K.’s most durable and attractive real estate locations due to its position as a world-class knowledge center in technology, artificial intelligence, biotech and life sciences.”

Glibly known as “Silicon Fen,” due to its location in the coastal English Fenlands, the tech cluster around Cambridge University is currently second only to London for scale-up tech investment in the U.K., while Cambridge University has historically raised more capital investment from its spin-out companies than any other university in the world.

Last month, the U.K. Government announced that it would support a multimillion-dollar joint venture between the University of Cambridge, which is home to an acclaimed Artificial Intelligence Group. and Microsoft, which in recent months has determinedly boosted its investment in AI research initiatives.


Even with considerable uncertainty around the Brexit process, U.K. real assets have continued to attract signal investments. And within this subset, Cambridge has seemed to remain above the direst economic forecasts.

Cambridge’s knowledge economy has consistently grown by some 10% per year since 2013, generating approximately $6.4 billion in economic product.

Research from global property agent Savills found that commercial real estate prices in Cambridge continued to rise more than any other key regional U.K. city after the 2016 E.U. referendum.

Meanwhile, prime office rents in Cambridge are signing at around $58 per square foot, while the going rate for Oxford is currently around $52 per square foot. These figures are only slightly below the current market rate of around $63 per square foot in Canary Wharf, one of the pre-eminent post-codes for major global financial firms operating in London.

Speaking with Cambridge’s Business Weekly, consultancy firm Bidwells’ Head of Business Space Agency, Dick Wise, said the Cambridge office market is on track to hit a five-year high in 2019, this “during one of the most uncertain economic periods in living memory.”

This tech cluster premium has extended beyond Cambridge’s commercial real estate and into appurtenant residential markets. Bidwells documented a mean 20% premium for home prices located in comparable global research hubs. Their study of average home prices from the fourth quarter of 2009 through the third quarter of 2018 found that prices in Cambridge rose 73% during the period, while prices in rival uni town Oxford rose nearly 67%.

Perhaps a borderless thing

It bears noting that the phenomenon of tech clusters and real estate price inflation is neither novel nor a purely British occurrence. Research released earlier this year from Jones Lang LaSalle (JLL) uncovered a robust (and intuitive) correlation between technologically innovative, talent-rich cities and real estate prices.

Looking at a pool of U.S. tech clusters, analysts at Legg Mason pointed to venture capital investment levels as the factor linking tech development to commercial real estate price movement. (At present, there are 253 venture capital firms with investments in Cambridge, U.K.)

Resilience in tech-cluster real estate has also been observed in clusters across the Atlantic. Further JLL research from 2019 found that in leading life science clusters of Boston, San Francisco, San Diego and Washington D.C. laboratory vacancy rates tend toward roughly half the level of traditional office vacancies and are less market elastic.

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