Office Commercial Mortgages Cambridge

Underwriting a Cambridge office commercial mortgage

Cambridge is the largest regional office market in the United Kingdom outside London, 11 million square feet of stock and the regional HQ for KPMG, Deloitte, PwC, DAC Beachcroft, Walker Morris and Channel 4. The commercial mortgage market splits into four practical bands. Cambridge Science Park Grade A at the top, institutional investors only, single-asset deals £15M+, rarely brokered. St Andrew's Street, Trinity Street and King's Parade in the £1M–£5M bracket, secondary CBD investment that we work most often. Cambridge Biomedical Campus and Station Road for newer mid-cap stock. Newmarket Road Urban Village and Cambridge Science Park at the creative-office end, converted heritage industrial floors at £400K–£2M.

Investment underwriting tests ICR at 140–155% on let office stock. Tenant covenant carries even more weight than on retail, a five-year unbroken lease to a national professional services firm prices materially better than the same building let on three two-year leases to local independents. Multi-let assets with rolling renewals price at the wider end. Owner-occupier office routes through the EBITDA-cover product at 1.3–1.5x, the accountancy practice converting from leasehold to a Cambridge Science Park floor purchase, the consultancy buying its Trinity Street townhouse, the legal firm taking the freehold of its St Andrew's Street building.

Worked example: a St Andrew's Street 6,500 sq ft office investment, £1.85M valuation, let on a 7-year FRI to a regional law firm at £125K passing rent. ICR at 145% sizes a £1.2M loan at 65% LTV; Lloyds, NatWest and Santander all price this profile at 7.5–8.0% pa on a five-year fix. Worked example two: a Cambridge Science Park creative-office freehold purchase by a small architectural practice, £680K, EBITDA cover 1.4x. Owner-occupier route at 70% LTV places with Allica or Shawbrook at 7.5–7.25% pa.

Post-Covid Cambridge office stock has carried real value-add opportunity, particularly in the St Andrew's Street to Trinity Street band. Vacant or part-let assets purchased through bridge-to-let, refurbished to current EPC and amenity standards, then re-let and termed out onto investment mortgage. Shawbrook, LendInvest and Hampshire Trust Bank have been the most active on this strategy. The EPC-B requirement effective from 2030 has accelerated refurbishment activity on secondary CBD stock.

Finance structures for Cambridge office

Investment routes via commercial investment mortgage on ICR; owner-occupier via the EBITDA-cover route; vacant or value-add via bridge-to-let with an agreed term-out. Larger multi-asset office portfolios consolidate via portfolio refinance.

Lender appetite for Cambridge office

Strong on prime let stock with national covenants and unexpired lease term over five years. Mid-strength on secondary CBD with mid-covenant tenants on shorter leases. Tighter, but still fundable, on vacant or part-let secondary office routed through bridge-to-let with a credible refurbishment story. <strong>NatWest</strong>, <strong>Lloyds</strong>, <strong>Barclays</strong> and <strong>Santander</strong> compete on prime investment at 7.0–7.75% pa for 65% LTV with strong covenants. <strong>Shawbrook</strong>, Allica, HTB and Cambridge & Counties cover mid-market at 7.75–7.5% pa. <strong>InterBay Commercial</strong>, <strong>LendInvest</strong> and <strong>Cynergy Bank</strong> handle secondary, short-lease and refurb-to-let stories at 8.25–9.25% pa. Cambridge Science Park Grade A above £15M routes through institutional debt outside the broker panel; below that band, our pool covers it.