Oxford vs Reading: A tale of two cities

When it comes to the Thames Valley commercial property market, Oxford and Reading are often compared as two of the region’s most important business hubs.

Both attract global investors, fast-growing occupiers, and high-profile development schemes.

Yet the dynamics of their office markets could not be more different, according to Agency Partner, Guy Parkes.

At Vail Williams, we are uniquely positioned to compare these two markets. With offices and expert teams on the ground in both Oxford and Reading, we have first-hand insight into how each city is evolving – and what opportunities lie ahead for landlords, occupiers, and developers.

What emerges is a tale of two cities: both on the cusp of growth, but facing very different challenges in their office property markets.

Oxford Office Market: Shortage of supply, rising rents

The Oxford office market is experiencing exceptional demand, driven by its world-class universities, thriving life sciences sector, and growing technology cluster across the Oxford Arc.

Knowledge-based industries are fuelling demand for high-quality commercial property – but supply is failing to keep pace.

Grade A office space in Oxford is scarce, leaving occupiers to compromise on second-hand stock that rarely meets modern business requirements. At the same time, office rents are being pushed upwards by competition with Oxford lab space, which is currently achieving around £65 per sq ft Cat A.

Guy Parkes commented: “Lab space is certainly approaching oversupply. By contrast, office space is significantly under-supplied, as most recent developments have focused almost exclusively on labs.

Vail Williams believes that, with office rents achievable in excess of £60 per sq ft, development remains viable even with build costs now at around £300 per sq ft.

According to Guy, rents would need to fall below £50 per sq ft to undermine viability: “Even during the dot com crash of 2000 or the financial crisis of 2008, rents only dropped by around 16%. Therefore, from a baseline of £65 per sq ft, schemes would still stack up,” he adds.

These rent levels are sustainable for now thanks to venture capital investment in the science and tech sectors, but questions remain. What happens when VC funding slows, and companies must prove profitability while managing high overheads?

Without new development, the Oxford commercial property market risks pricing out businesses beyond life sciences. A diverse economy needs high-quality office space as much as laboratories. The opportunity for developers is clear: build the right stock, and Oxford occupiers will come.

Reading Office Market: Ample stock, but is it the right quality?

On the face of it, the Reading office market looks better supplied. Vacancy rates suggest plenty of available space.

But scratch beneath the surface, and much of this stock is dated, poorly located, or unappealing to modern occupiers.

The game-changer has been Station Hill, Reading’s landmark mixed-use regeneration project next to the station.

This London-quality development is raising the bar, attracting major corporates who value connectivity, amenities, and ESG credentials. Prime rents in Reading are rising as a result, surpassing historic levels and proving that occupiers will pay for best-in-class space.

For landlords, the message is clear: Reading doesn’t need more space – it needs better space.

“Repurposing outdated offices into Grade A, prime quality stock is the only way to remain competitive in this maturing Thames Valley commercial property market.

“We are in a period of adjustment where landlords are re-evaluating the market. There’s often a lag between market demand and delivery of new office product. Fortune will favour those landlords who predict change and react the quickest.

“In the interim, we expect to see locations that were once previously considered ‘fringe’ to benefit from these supply shortages, with rental growth following suit.”

Lessons for Oxford from Reading’s commercial evolution

Oxford may boast the richer historical heritage, but Reading has already walked the path of rapid commercial growth. Its experience offers valuable lessons for the Oxford office market.

During the IT and telecoms boom of the 1990s, Reading became the UK’s tech capital. Global giants such as Dell, HP, Microsoft, Cisco, and Oracle clustered around the Thames Valley, seeking office property near Heathrow with fast access to European markets.

Developers moved quickly, repurposing industrial land for business parks on the town’s edge. Green Park became the flagship – a former gravel site transformed into a corporate hub, fuelled by demand from tech occupiers like Cisco.

Rents surged by 35-55% in the late 1980s, from £12.50 psf to £19.50 psf then grew steadily through the 1990s, peaking at £30 psf in 2000 (around £37 psf in today’s money).

But oversupply, combined with the global downturn after 2000, saw Reading’s prime rents fall back by 10%, bottoming out at £24 psf in 2006.

Fast forward 25 years, and Green Park’s rents remain broadly at the same real-terms level. The lesson? Single-sector growth without long-term balance creates risk.

Shared challenges: Development and quality

Five years on from Covid, occupier resizing has largely played out. With each year, its impact diminishes, leaving a clearer picture of robust underlying demand in both the Oxford and Reading office markets.

And for all their differences, Oxford and Reading share a common truth: genuine demand outstrips usable supply once poor-quality stock is discounted.

Both markets are defined by occupiers demanding London-quality office space – sustainable, well-designed, and talent-attracting. In both, new development and repurposing will be critical to the next growth phase.

Opportunities in the Thames Valley office market

The Thames Valley commercial property market is entering a new phase, with Oxford and Reading at its heart.

• Oxford faces a chronic undersupply of Grade A office space, where rents are rising but opportunities risk being lost if developers don’t deliver.
• Reading has stock in abundance, but much of it needs repositioning. New schemes like Station Hill show that high-quality development can redefine a market.

Both cities are on the cusp of an office boom, but success will depend on delivering the right stock, at the right quality, in the right location.

For investors, developers, and occupiers, the opportunities are significant. And with Vail Williams’ on-the-ground teams in both Oxford and Reading, we are uniquely placed to help clients navigate these evolving markets.