Investors urge NHS to unlock land for life sciences innovation

Real estate investors are seeking more access to land held by the NHS so that more specialised life sciences communities can be established in those spaces and help drive growth in the sector. James Sheppard, head of commercial UK and Ireland at Kadans Science Partner, told an audience at MIPIM last week that the NHS occupies a “huge volume” of land that investors are keen to acquire, and partner with the healthcare system on, to facilitate innovation in life sciences.  Speaking at a panel hosted by EG at the latest MIPIM conference in Cannes, Sheppard said that “the role of the NHS needs to be a bit more commercially savvy”. He cited Kadans’ own efforts to unlock projects with an undisclosed NHS trust that have made slow progress in the past four years against a backdrop of soaring tenant interest. “I am aware of the political and economic challenges, so this is maybe an oversimplification, but by unlocking those bits of land we can build and create communities on NHS hospital campuses, which is where a tremendous number of these people want to be based,” said Sheppard. “If we can find a way to unlock that, the NHS’s role in innovation becomes very clear, very quickly.” Growth potential Sheppard added that the NHS had become “really good” at providing access to data as well as patients and clinical trials, creating the scope for attracting pharmaceutical players to the UK’s major cities. “This is where a big city with a diverse population is very attractive to global pharmas, because there’s a tremendous number of opportunities to run different types of trials at different stages,” he said. “The NHS is doing a lot of things really well. But there are things we could improve on to make sure that innovative businesses and academics that want to be in closer proximity to clinicians can be based there [rather than] having to commute or, in the worst case, deciding they don’t want to be based there at all and get on a plane to Boston.” More leadership around place in cities could provide a solution for unlocking this growth potential, according to Tony Reeves, chief executive of Liverpool City Council. He underlines that Liverpool is clear on its long-term goals and that its NHS institutions form part of its city plan alongside the council, private sector partners and universities. “We bring decision-makers together to look at these problems holistically,” said Reeves. “In the cities that are really progressive, I think it’s much easier to do. I’d put Liverpool at the heart of that. “Our ability to problem-solve by bringing all the different sectors together is growing all the time, and that is really important to build an investment culture going forwards.” Reeves emphasised the importance of real estate for fostering collaboration between the NHS and universities. “You can do it academically and digitally, but the concentration of people in a place drives even more innovation,” he said. Big ambitions Christopher Mertlitz, managing director and head of European investments at WP Carey, placed the potential for life sciences “on a par” with what the logistics market is experiencing in terms of rising capital and interest in the space. However, he observed that more needed to be done to make life sciences businesses aware of the scale of demand from investors and the amount of capital waiting in the wings. “Scientists should be seeing real estate as a key part of their business, not just something that’s there to come to work in,” agreed Kadans’ Sheppard. He added that the onus was not just on educating the scientific community, but also real estate. “You look at the US’s very mature market, the level of knowledge they have among their professional services teams, whether that’s the brokers or engineers – it’s a completely different level to where we are in Europe,” he said. “We will get there, it will just take time.” ‘On the precipice’ For Sheppard, life sciences is not a new asset class in the UK – what has changed is how it is perceived. He said the sector would be able to better fulfil its potential when companies, real estate and the public sector become more ambitious about scaling up. Sheppard said this was already starting to manifest, highlighting that some £4.5bn was invested in biotech and life sciences in the UK during 2021. As such, US-style funding models with early-stage financings are becoming more prevalent, which is in turn boosting the quality and quantity of science and, by extension, demand for space. “You can imagine what that means from a real estate perspective – instead of taking 500 sq ft, they are taking 50,000 sq ft,” said Sheppard. “All of this is starting to permeate through.” He added: “It is coming. We are on the precipice of something pretty special in the UK.” The panel James Sheppard, head of commercial UK and Ireland, Kadans Science Partner Tony Reeves, chief executive, Liverpool City Council Christopher Mertlitz, managing director and head of European investments, WP Carey To listen to all of EG’s panel debates at MIPIM 2022, subscribe to the EG Property Podcast on any of your favourite podcast players or visit EG’s Podbean channel To send feedback, e-mail pui-guan.man@eg.co.uk or tweet @PuiGuanM or @EGPropertyNews Photo © Liverpool City Council