2024’s life sciences agenda – more and better space

The UK life sciences sector is set for a busy 2024 as new purpose-built stock comes out of the ground over the course of the year, boosting activity across the key markets of Cambridge, Oxford and London. Developers are taking on the challenge of transforming real estate in response to changes in the way scientists work and tackling a severe mismatch between the demand and supply of lab space. Alan Kypriadis, managing director and senior partner at architectural firm Patriarche UK, said: “Just like other industries, the life sciences sector is experiencing changes in working patterns, with a growing emphasis on collaboration and a preference for co-working-style facilities. “Moving away from traditional labs, the buildings need to be connected, reversible and modular, so that they can easily be adapted to the constant innovation and evolution of the companies they serve. In response to this, there is a growing need for adaptable lab spaces.” Ariel Levy, co-founder of developer Gen Two, added: “As the life sciences market matures, a lot of the features of a well-designed office will continue to permeate lab and ‘write-up’ space for desk-based tasks. These include breakout spaces, informal meeting rooms, flexible boardrooms and private booths.” Arc ambitions As such, the year ahead presents “an opportune time” for occupiers, according to Tucker White, US life sciences lead at Avison Young, as new-build facilities near completion. Taking a closer look at Cambridge, the UK’s most mature life sciences market, Prologis’s 1000 Discovery Drive, part of the second phase of the Cambridge Biomedical Campus development, is expected to be ready for occupation in the summer. The 100,000 sq ft building has been fully prelet to BioNTech and an NHS diagnostics services department ahead of its completion. Michael Aston, head of life sciences at Cushman & Wakefield, described the prelet as “the proof of the pudding” for the UK life sciences real estate sector and said he expected the trend to continue over the course of the coming year: “We expect that 2024 will see a return to powering the growth of more established companies, which will translate to greater demand for high-quality space.” Thomas Renn, vice president of acquisitions and development for Europe at Breakthrough Properties, added: “Long-term biopharma fundamentals and tailwinds remain strong, and the industry is experiencing an unprecedented pace of medical innovation and discoveries of new life-changing therapies which will continue to drive long-term demand for labs.” Elsewhere in Cambridge, occupiers are likely to be eager for space at BioMed Realty’s One Granta (pictured), scheduled for completion in the third quarter of 2024. One of the floors in the four-storey building has already been prelet to T-Therapeutics. Sven Topel, chief executive at Brookgate, the developer behind the Cambridge North masterplan, which comprises 570,000 sq ft of lab space alongside 425 mixed-tenure homes, said: “Life science hubs such as Cambridge are suffering from a notable shortfall in space. “As we head into a general election year in 2024, we need assurance that the current investment in Cambridge and the life sciences sector is a priority for all political parties going forward, giving tenants confidence that the UK is committed to this dynamic sector and developers and investors reassurance that we can continue to support this key contributor to the UK economy.” London and the regions In London, all eyes will be on Tribeca, an 830,000 sq ft laboratory located in the heart of the capital’s biotech cluster. The first phase is scheduled to complete in the first quarter of 2024. It is being delivered by BlackRock Alternatives in partnership with British Airways’ New Airways Pension Scheme, Reef Group and Singapore sovereign wealth fund GIC. Part of the building has already been taken by the London BioScience Innovation Centre. Tom Mellows, head of UK science at Savills, said: “2024 will see the delivery of the first larger purpose-built lab space in London, which should help to accelerate take-up in the capital. We continue to see positive levels of demand and expect to see an uptick in activity over the coming year.” Charles Walford, property director and head of life sciences at Stanhope, said: “Despite market headwinds, the life sciences sector in London continued to thrive in 2023 and we see this continuing into 2024, with the capital’s innovation districts bolstered by new lab spaces. “Looking at our own schemes, the British Library and Royal Street both secured resolutions to grant, and at White City Place work has commenced on new grow-on labs. These labs are designed and equipped for start-ups and expanding life sciences companies, responding to a growing need for more affordable spaces.” Lab vacancy rates at the end of 2023 stand at just 1% in Cambridge and London, and 7% in Oxford, according to British Land. Michael Riordan, managing director at Linesight UK, said: “This means developing new districts and clusters outside the Golden Triangle will play a critical role in housing the next generation of research hubs.” Patriarche’s Kypriadis said cities including Manchester, Birmingham and Newcastle could “all benefit from some of the top research institutions expanding their campuses”, adding that this “would not only spark economic growth and employment within these regions but help to boost the UK life sciences sector overall”. Bruntwood SciTech is making progress on the delivery of the first phase of Birmingham Health Innovation Campus, which is set for completion in the spring. The 130,000 sq ft development will offer flexible lab and office space for companies working in the medtech, precision medicine, diagnostics and digital healthcare sub-sectors. Ready for headwinds Despite the potential, the life sciences sector is expected to face challenges in the coming year. While industry experts expect supply constraints to be alleviated by larger life sciences schemes, the delivery is expected to be slower than projected owing to increased construction and debt financing costs. Linesight’s Riordan said: “With spaces for life sciences already in high demand, support for the construction industry will be needed in 2024 to scale up the production of the specialised facilities required to meet the likely increased demand. Staff upskilling and recruitment will also be essential to meet the future demand.” Gen Two’s Levy added: “Critical infrastructure in the UK is slowing, in some cases preventing lab developments coming forward to market. “Access to power is holding the industry back from both building the labs we need and ensuring that they are ESG compliant. Electricity generation from gas is not acceptable to most real estate developers, and it is equally unpopular with life sciences tenants. “We face a similar story in Cambridge around water supply, where new reservoirs are needed to be constructed as part of the area’s large infrastructure projects. By taking a proactive approach to fixing infrastructure elements that are within our collective control, only then can we look to achieve unconstrained growth of life sciences space.” To send feedback, e-mail evelina.grecenko@eg.co.uk or tweet @Gre_Eve or @EGPropertyNews Image © BioMed Realty