EG Cities Oxford: Life sciences, tech and real estate – the real golden triangle

From how we diagnose a disease through to how we create new drugs to prevent and treat it, the digital transformation of life sciences is unstoppable and is pulling in serious capital. For Anna Strongman, chief executive of Oxford University Development, every step forward for life sciences further underlines the need for the real estate sector to keep pace. Nowhere more so than in Oxford, one of Europe’s most successful life sciences clusters. Strongman is leading the delivery of innovation districts and graduate accommodation on behalf of a joint venture between the university and Legal & General, aimed at addressing an acute shortage of suitable space. Shifting working patterns The impact of digital advances is visible everywhere, she says, whether that is in the use of artificial intelligence and machine learning in data analysis and drug discovery, or quantum sensing (an advanced sensing technology) in diagnostic screenings. “It is obviously critical that we consider how to support all of those elements, everything from power networks through to the types of facilities that we’re creating,” says Strongman. The OUD currently has a 135,000 sq ft expansion project coming out of the ground at Begbroke Science Park (pictured) to house university research groups and private sector companies. It is also consulting on longer-term plans for the 470-acre Begbroke Innovation District. Artem Korolev, chief executive and founder of Mission Street, a specialist investor and developer in science and innovation space, agrees that it is vital for real estate to respond to the growing convergence between science and tech. Shifts in working patterns brought about by the pandemic also play into this, he says. Lab work cannot be done in a hybrid format, but back-office work can be done remotely. This has led to life science businesses requiring a higher amount of lab space and less office space in the buildings they occupy compared with pre-pandemic, he says. “That requires buildings to have very good connectivity, very good resilience in terms of both power and data,” he says. “There are accreditations, like WiredScore, which are important in a lot of locations to demonstrate. It’s certainly a very big piece of due diligence discussions with prospective occupiers.” Mission Street, in joint venture with investment manager BentallGreenOak, bought two retail warehouse assets in Oxford in June 2021 for redevelopment as laboratory space. This purpose-built space is much needed in Oxford’s undersupplied market. Influence of tech Charles Rowton-Lee, Savills’ head of commercial agency based in Botley, just outside Oxford, who specialises in the southeast office and industrial markets, points out that “science has only really hit the Oxford market over the last six years”. That means that many of the buildings which are currently used for laboratories and tech are in fact converted office buildings. “People are having to make do with what they’ve got,” says Rowton-Lee. “The interesting thing is that with AI and machine learning playing such a big part in these science companies, they see themselves as tech companies. What we have seen in several situations is that wet laboratories are being converted into data rooms and they’re full of computers producing multiple terabytes of data.” Not only is tech becoming increasingly important within the science sector, but traditional tech companies are also increasing their interest in science. “We’re seeing enormous investment from those companies into science generally in the UK and Oxford, but also around the globe,” Rowton-Lee says. “We’re seeing Apple, Meta, Google – all sorts of large companies – investing very heavily into medtech and life science as a way of promoting business, but also expanding globally.” Strongman points to co-location examples such as Google in Kendall Square, Cambridge, Massachusetts and Meta’s plans to move into Durham, North Carolina, alongside other tech companies. In the UK meanwhile, Microsoft and a raft of other tech companies are heading to Cambridge. “This is really happening and one of the challenges we have in Oxford is that we don’t really have the space to cater for that,” she says. “It’s very interesting for the evolution of Oxford how we create the variety of space in a very constrained land market to cater for the tech alongside the academics, alongside the SMEs, and so on.” Flexible environment Rowton-Lee is confident that those occupiers will come to Oxford – even if it is not yet clear where they will come to. “I think that will become very clear over the next probably two or three years. What we will see is them coming in via mergers and acquisitions of existing companies within the market rather than just coming in cold, I think, and starting afresh.” With its significant landholdings, the OUD will no doubt form a big part of the solution. But, as Strongman points out, these could take a decade to build out at significant scale. “The challenge is to create an environment which is flexible enough to respond to the physical requirements of these potential occupiers, their co-location requirements and their digital and wider infrastructure needs, such as power,” Strongman says. Occupiers clearly want a multidisciplinary approach, and the task for developers is to “enable the ecosystem to thrive”. It is also vital to bring the local community on board with a persuasive case for development. Mission Street hopes to meet some of those needs in the shorter term at its £100m Botley Road revamp. Korolev says the first phase, currently under construction, is a mix of wet lab and other laboratory use while the second phase will be more corporate space. “The idea is to create this quite interesting mixed cluster where you have life sciences, where you have green tech, where you have various types of technology and you are co-locating it in a central location,” he says. Korolev sees increasing spin out activity fuelling demand in the city. Looking ahead, it will be crucial for the real estate market to help facilitate research collaborations between these companies and US companies as one way of keeping UK R&D activity in the UK. “It’s a really interesting challenge and an enormous opportunity,” says Strongman. “We must get on with it because if people can’t find space in Oxford, they are not going to other places in the UK, they are going to Boston, for example. It’s imperative that we realise the potential of the city, the university and of the sector. We just have to be very fleet of foot and nimble about how we do that.” The panel Artem Korolev, chief executive and founder, Mission Street Charles Rowton-Lee, head of commercial agency, Savills Oxford Anna Strongman, chief executive, Oxford University Development To send feedback, e-mail julia.cahill@eg.co.uk or tweet @EGJuliaC or @EGPropertyNews In partnership with         Photo © Robert Judges/Shutterstock