Savills’ new science lead on the race for space

Savills’ new head of science for the UK is preparing to help the agency win more real estate work from a market in which investment is rocketing. Tom Mellows, a director in the company’s South East office agency team since 2005, has been named its first head of UK science, with other professionals from elsewhere joining him in a team to tackle growing opportunities in the sector. Research from Savills reveals that UK pharma and biotech companies attracted almost £22bn of capital in 2021 across initial public offerings, mergers and acquisitions, and venture capital investments. In England, venture capital raised increased by 126% year-on-year, far beyond the 56% annual growth recorded in 2020. Based on companies’ headquarters locations, venture capital investment is split roughly equally between London, the South East and the East. The best-known hubs for life sciences have benefited from demand during the pandemic, but Mellows said there are other growth drivers, including the maturity of the clusters springing up in established locations. “Cambridge is the most mature market for life science space in the UK, which has got a really well-established ecosystem of companies,” Mellows said. “There are really small start-up companies and incubators as well as more mature businesses and big, established businesses. Then there are big pharma companies, service providers, contract research organisations.” Mellows said top rents for purpose-built labs in Cambridge stand in the “late £40s”, for example at Granta Park. “The rents there are going to move on, probably at least into the £50s and £60s,” he added. In Oxford, Mellows estimates that life sciences companies now account for as much as 80% of demand for space. “This has completely overshadowed some of the other traditional sectors that have had space in Oxford, like solicitors and accountants,” he said. “You’ve also got a good real estate market in Oxford, where there is a bit more space for tenants to take. You have landlords that are quite innovative, looking to provide pre-built laboratories, rather than tenants having to take on all the responsibility and cost of converting office buildings to labs.” London, meanwhile, has become a popular base for early-stage life sciences firms, which are taking smaller spaces of up to 10,000 sq ft. However, Mellows said he expects the growth trajectory of London over the next five to 10 years to show an “exponential growth” as those small companies mature, attract more investment and “start wanting big chunks of space”. “In terms of the real estate market, we have seen the beginnings of landlords in London looking to provide good real estate solutions for research and development laboratory space,” he said. “Some smaller pre-built incubator space is being provided at the moment, which is the first that has been provided on a commercial basis. Until very recently, the only incubator space in London was provided by academia.” Looking ahead in the capital, he added: “There are going to be more companies emerging, wanting space. There are going to be more landlords announcing plans for specific, targeted development or refurbishments, office conversions. I think the market is really going to start to gather pace in London.”   To send feedback, e-mail evelina.grecenko@eg.co.uk or tweet @Gre_Eve or @EGPropertyNews