Will Brown, Director at Cheffins discusses how AI is impacting the Cambridge property market.
"Walk around Cambridge and you don't have to look very far to see the influence of technology. It is everywhere: in the science parks, laboratories, university spin-outs, research centres and the growing number of businesses that have developed around them. For years, the city's property story has been relatively simple. Great science attracts great businesses, and great businesses need space.
Artificial intelligence is starting to change that relationship. But perhaps not quite in the way many people expect.
There has been plenty of discussion about whether AI will mean fewer people in offices, more remote working and, ultimately, less demand for traditional workspace. That may well happen in some parts of the market. But for Cambridge, I think the more interesting question is what happens when the businesses driving the next wave of innovation need a very different kind of space.
Traditionally, it was relatively easy to describe what a business needed. A biotech company needed a laboratory. A software company needed an office. A manufacturer needed industrial space. Today, those lines are becoming blurred.
Consider a Cambridge company working in AI-enabled drug discovery. It might have software engineers, data scientists and biologists all working on the same project. A robotics business could have programmers sitting alongside engineers and technicians. A deep-tech start-up might need offices, laboratories, testing facilities and somewhere to build and prototype its ideas.
These businesses don't necessarily fit neatly into the traditional property categories of office, laboratory or industrial space. They need a mixture of all three, often within the same building or campus.
That is particularly interesting for Cambridge because one of the city's greatest strengths is its proximity. Its appeal has never been just the University, the talent or the concentration of successful technology and life-science companies, it’s the fact that so much of that ecosystem exists within a relatively small area.
A researcher can move between academia and industry. A start-up can recruit someone from an established technology business. A scientist can collaborate with a software engineer. Investors, entrepreneurs and researchers can meet without having to cross a major city. That proximity has always been part of Cambridge's appeal, and as different disciplines become increasingly connected, it could become even more valuable.
It is therefore easy to assume that AI will simply reduce the amount of physical workspace businesses need. But fewer desks doesn't necessarily mean less demand for commercial property.
A company may need fewer conventional workstations while needing more laboratory space, technical infrastructure, meeting areas, testing facilities or specialist power. The balance is changing.
For landlords, that means the question is becoming less about how many people an occupier employs and more about what infrastructure the business needs to thrive.
That creates an interesting challenge, because technology moves quickly while buildings don't.
A building that works perfectly well for an occupier today might not work for them in five years. Can the floorplates be adapted? Is there enough power? Can office space be converted into laboratory or technical space? Can an occupier expand without having to relocate? Can the building accommodate new equipment and different ways of working?
These may sound like technical considerations, but they are becoming increasingly important when businesses decide where they want to locate. Flexibility could become one of the most valuable features a commercial building can offer.
It also means that the growth of AI and technology will not benefit every building in Cambridge equally. Buildings with good locations, strong connectivity, high-quality accommodation, the right infrastructure and the ability to adapt are likely to be better placed to respond to changing occupier requirements.
Older or less flexible buildings face a different future. Some will need investment. Others may need to be repositioned. Some may simply become harder to let as occupiers become more selective about the space they need.
Cambridge doesn't have a shortage of commercial property in the traditional sense. It has a shortage of the right commercial property.
That distinction is becoming increasingly important.
There is also a much bigger question sitting behind all of this. If AI helps Cambridge create another generation of successful businesses, where are those businesses going to go? Where will they recruit their people? Where will those people live? How will they travel to work? And where will the next generation of laboratories, research facilities and specialist workspaces be built?
These aren't separate questions. They are all part of the same conversation about whether Cambridge can continue to grow while maintaining the characteristics that made it successful in the first place.
For the property industry, the implication is that the next phase of Cambridge's growth won't simply be about providing more floorspace. It will be about providing the right floorspace, in the right locations, and creating buildings that can evolve alongside the businesses occupying them.
The future of Cambridge property is not simply a question of more offices or fewer offices. It is more nuanced than that.
The buildings that succeed will increasingly be those that support innovation rather than simply accommodate employees. That could mean offices and laboratories operating alongside each other, flexible R&D space that can change as a company grows, or better-connected locations that allow businesses to tap into Cambridge's wider ecosystem.
Ultimately, AI isn't just changing what people do at work. It is changing what they need from the place where they work.
And in a city like Cambridge, where technology, science and property have always been closely connected, that could have a profound effect on the commercial property market over the next decade."
To find out more about the Commercial Division at Cheffins, please visit: https://www.cheffins.co.uk/commercial-property.htm