Reduced Research & Development (R&D) productivity, as well as patent expiries and advances in technology, has led to significant changes for the pharmaceutical industry. Leading life sciences firms are not only being forced to look closely at the scale and cost of their property portfolios but also question whether they are located in the best environment to access innovation and talent. Real estate in the life science industry is moving from being an operational necessity to a source of competitive advantage.
A lot of us think of science parks and our minds go to out of town campuses, and that’s certainly how we’ve been used to seeing them in the past, but this is changing. Location is now being seen as a critical part of driving innovation for many life sciences firms, and increasingly, the bigger businesses are opting for more urban spaces that are far less secluded and have a very different look at feel. The main reasons being, to attract the brightest minds and position themselves close to the biotech start-ups that are disrupting the industry.
Life sciences companies are also realising that who their neighbours are is very important and that by working alongside, and sharing ideas with academics and start-ups, they can boost productivity, make use of the latest technological innovations and even share resources or jointly apply for grants. It’s not just about being nearby to others in the sector, we’re seeing a trend whereby firms are taking space in the same buildings as one another, which is leading to a pipeline of life sciences facilities which house academics and SMEs alongside a large pharmaceutical company to create a thriving community under one roof.
When selecting a part of the country to base themselves – we’re still seeing most businesses opting for the ‘Golden Triangle’, which is made up of Oxford, Cambridge and London. In fact, almost 50% of the total life sciences employment in the UK being based there.
However, developers have caught onto the changing needs within the sector and have started paying attention to locations inside London. There has previously been a severe shortage of specialist space in London but the market is starting to respond to the rapidly growing demand in London. The most advanced of all these developments is Imperial College’s move to White City, where it opened the Translation & Innovation Hub (I-Hub) in 2017. This move places it at the heart of a burgeoning innovation centre. Right across the road is White City Place, the former BBC building, which includes office space for lab and R&D and is already home to new businesses including GammaDelta Therapeutics. We should expect to see more moves like this one going forward.
Further afield across the country, we’re seeing more interest and investment in urban clusters such as Manchester, Nottingham, Edinburgh and Glasgow. Birmingham, Leeds, Newcastle, Bristol, Aberdeen and Dundee are following close behind as emerging markets as, like Oxford, Cambridge and London, these cities have strong universities that are producing the talent the industry seeks. In October 2018, the University of Birmingham announced it was seeking a funding partner to develop a £300m life sciences park, which is good news for a historically underserved city.
As we see more urban developments coming forward over the next few years we can expect that this will kick-start a more specialised life sciences real estate industry in the UK, which is very exciting for investors and occupiers and replicates an established sector in the US. The existing pipeline is impressive but will easily be exceeded by demand over the longer term, given the significant increase in both the number of companies and investment raised by them over the past 5 years. It’s an exciting time for the sector and there is a spotlight on the bigger players to focus on their property portfolios and work together with others to drive R&D, innovate and shake-up the sector.
About the Author
Dr Glenn Crocker is head of UK Life Sciences at JLL. Glenn joined JLL from BioCity Group, a leading UK Life Sciences business incubator and bioscience park, where he spent over 15 years as CEO, working closely with large and small pharmaceutical companies, universities and government agencies.
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