Sector: London Offices | Contact: Patrick Ryan
The last two years have seen more real estate interest in life sciences than at any stage in the past 20 years. As the UK and wider world wrestles with the long-term implications of COVID-19 – and, indeed, the potential for future pandemics – this interest will now ratchet to a whole new level.
Financial and political support from central government, coupled with substantial backing of biotech companies from venture capitalists, makes life sciences one of the safest bets for landlords seeking to identify the best tenants for their schemes.
The Knowledge Quarter, centred around King’s Cross and Euston, is emerging as a significant hub for life sciences, alongside smaller clusters in White City and Whitechapel, and over the past three years the sector has taken over 700,000 sq ft of space.
Gerald Eve’s planning team expects the Knowledge Quarter, medtech and life science sectors to continue to flourish, especially where boroughs see the significant opportunities created for regeneration and spin-off activity.
In the past month, Gerald Eve’s planning team submitted an application on behalf of Precis Advisory and Access Self Storage Ltd for Belgrove House in King’s Cross that will provide 250,000 sq ft of life sciences space for MSD UK. The specification of the scheme demonstrates the very exacting requirements of MSD, while also being flexibly designed so that the other life sciences companies could use the space in the future.
The good news is that the heavy capital expenditure is starting to lighten as the provision of on-site lab space is becoming less important to life sciences occupiers.
Patrick Ryan, Partner
In line with other similar projects, the developers and our planning team worked closely with researchers and life scientists to design a building that not only meets the requirements of the Knowledge Quarter, but also understands the specifications of a life sciences occupier, specifically:
In addition to the above, and building on the relationship between Belgrove House and those experiencing it from outside, the Euston Road façade will be glazed to enable a picture window giving passers-by an insight into activity happening inside the building. The contemporary approach to the building’s architecture symbolises its role as an incubator for innovation and is indicative of the scientific and medical advances that facilities of this nature have the potential to drive.
Belgrove House is typical of the way that life sciences are now front-and-centre of development across London, and the Mayor of London has given his support to different sectors to work together to solve healthcare challenges, including exploring the safe use of health data for research. This approach will support increased investment, allow innovative life sciences firms to grow, and enable new developments of this type to expand across the capital. There are currently over 1,300 life science companies situated in Greater London, employing over 60,000 people.
The growing importance of the sector raises a key question for London’s real estate developers and investors: how do they make returns greater than a conventional office scheme?
The good news is that the heavy capital expenditure is starting to lighten as the provision of on-site lab space is becoming less important to life sciences occupiers. Furthermore, the sector is shifting more towards a digital-based environment. Both of these enabled the experiments themselves to be undertaken elsewhere, while central London facilities are reserved for the high-level thinking and analysis that sits behind scientific breakthroughs.
Another previous reservation was the creation of wet labs and increased water/ air supply incurred a disproportionately higher build cost compared to a more traditional Grade A office building. But as the specification demanded by life science occupiers becomes more similar to existing corporate occupiers, development becomes an easier proposition.
Those interested in this property sector – whether they are developers, investors or consultants – are increasingly employing scientists to understand the specific needs of the life science sector. If they can deliver longer leases than a conventional office user of 15 years plus, and at premium rents, coupled with an increasingly fluid product, more and more property companies will clamber to enter this exciting sector.