Inside The Brookfield-Backed Science Campus That’s Fighting The Coronavirus And Rebooting The UK Economy
Angus Horner, William Cooper and the team that run Harwell science and innovation campus have been busy. While other developers have had to put schemes on hold recently or bemoan the convoluted nature of the planning system, Harwell has been granted national emergency powers to speed up its latest development.
That is because the next 75K SF building on the 710-acre campus near Oxford will house the UK’s Vaccines Manufacturing and Innovation Centre, primarily funded with a £130M grant from the UK government, where a vaccine for the coronavirus will be manufactured when it is ready. The building was already planned for Harwell, but its budget was doubled and the time frame accelerated when the pandemic hit. It will be capable of making 70 million doses once the facility opens its doors next summer.
“The centre was already planned, but when the coronavirus hit we put some calls in and said we need to double budget and do this faster, so we can manufacture a vaccine on a national scale,” said Horner, a director at Harwell. “Once the vaccine is ready we will be able to fire it out to everyone.”
Beyond the creation of the vaccine, the Diamond Light Synchotron at the campus — essentially a massive, massive X-ray machine — has been involved in the testing process that forms part of the race to find a vaccine. And Oxford Nanosystems has been involved in the DNA sequencing that is the foundation stage of vaccine creation.
The fight against the coronavirus is not the first major scientific project to be undertaken at Harwell, which has more than 200 companies and organisations employing 6,000 people. The 500K SF campus can trace its history of innovation back to the end of the second world war. But for a long time it was below the radar. Not so now. And it has also come to the attention of the real estate sector.
Earlier this year, Brookfield bought a 50% stake in the campus in a transaction reportedly worth around £240M. Specialist science and technology, often referred to simply as life sciences, is a small but fast-growing sector of commercial property that is increasingly attracting the attention of global investors like Brookfield.
Horner said that is because the life sciences sector, and successful examples like Harwell, sit at a unique crossroads: a place where property can benefit from the changing nature of the UK’s economy and position in the world, but also help to accelerate these changes and make the economy more robust.
“Either by luck or judgement the world has come to us slightly,” Horner said. “We’ve been doing this for 10 years now, and the knowledge economy is at the centre of the industrial strategy put in place by Theresa May and Greg Clark, but continued by the current government.”
“There are a series of things going on in places like Harwell that are not celebrated enough,” he added. “In the UK we are very British and self-deprecating and embarrassed, we do these amazing things and say, they happened by accident, and ask if someone will buy it for tuppence hal’penny, rather than marketing it and getting full price for it. But that’s what Britain needs in the new world. We have a knowledge economy that solves some of the world’s problems and we need to monetise it and bring in cash for the country. That’s why we want to shout about what people are doing here.”
For decades, despite totalling 710 acres and dozens of very big buildings, the Harwell science and technology campus wasn’t on the map. That’s not a metaphor — as the home of the Atomic Energy Research Establishment, the former air force base was a classified site, kept secret and off the map to protect its location during the Cold War. A 1950s ordinance survey map of the area proving as much hangs in the campus’s main lobby.
That secrecy belied some of the incredible scientific research and discovery going on at the campus. The first transistorised computer was assembled there in the 1950s. The first components that would go on to become the Large Hadron Collider at CERN were created there in the 1970s. The first satellite to land on a comet was developed at Harwell in the first years of this century.
But in spite of these successes, even after it was declassified and opened up to non-governmental occupiers, the UK government felt it wasn’t fulfilling its potential. So in 2013 it decided to bring in a private sector partner to try and improve the visibility of the scheme and attract more people, companies and outside funding to it.
The two government agencies that owned Harwell, the UK Atomic Energy Authority and the Science & Technology Facilities Council, created a 50/50 joint venture with Harwell Oxford Partners, a company owned by Horner, Cooper and Gordon Duncan, a financier with a long history in the biotech sector. Originally the government conceived the partnership as a real estate deal, with the principal aim of building more buildings on the campus, but Horner said the new joint venture partner quickly realised the campus needed more than just real estate expertise.
“The scientists that work here aren’t getting out of bed in the morning and thinking about marketing and PR,” he said. “They are getting on and doing world-changing things. We needed to create a narrative, to get out there and shout about what was being done here, focus on marketing and branding, getting the message out there about the credentials of the companies and people that are working here.”
“It was presented as a real estate project but it’s not, it’s a science and knowledge economy-led regeneration. We know how to put a building up, but that’s just the basic hygiene. A real estate person sees a field and wants to put a building up in it,” Horner said. “The interesting bit is rolling your sleeves up, going to meet the community of amazing scientists and researchers and companies here, and working out how we can help them, how we can pull more people and funding towards them, to continue that research. That is how we organically grow. We think of ourselves as a knowledge economy support business that is monetised through real estate.”
In that sense, the team Horner and his partners created deliberately drew on different backgrounds, rather than just real estate, and you are more likely to find them at life sciences conferences in Boston or San Francisco than at Mipim or Expo Real.
Having established the wider story of clever people doing great things next to each other, Harwell worked on establishing the areas in which its tenants had particular expertise and promoting specific clusters. These principally involve space technology, health technology and energy technology, and Harwell promotes these sectors specifically and looks to provide opportunities for companies in different fields to collaborate.
There is a paradox in the way life sciences or science and technology real estate operates. We live in an increasingly globalised, virtual world, where ideas can spring up anywhere, and people can communicate instantly. But in science, people and companies still want to cluster around the physical infrastructure that places like Harwell or other research centres provide.
“You have these dense areas of talent that are often centred around bits of physical kit, big labs and equipment that just can’t be moved,” Horner said. “And that attracts more people.”
“When it works you have a virtuous circle,” said Cooper, another director at Harwell.
Many government agencies aren’t willing to take the risk of building speculatively, but many startups or small and midsized enterprises won’t take pre-lets.
“But we knew the demand was there,” Cooper said.
“So you build a 50K SF building and you get five companies locating there. That creates x number of jobs and brings in x amount of funding. The public sector sees that and loves it, and other companies see it and want to be part of it. That’s how you create an ecosystem. People think that working in a joint venture with the public sector is bureaucratic, and to a certain extent it is, but it can be an incredible enabler. Public sector bodies can open doors, and give companies access to an incredible source of funding.”
Examples of this virtuous circle at Harwell include venture capital firm Longwall choosing to take space on the campus. And in 2016 U.S. biotech giant Agilent bought Cobalt Light Systems, a Harwell-based company that develops and manufactures spectroscopy instruments. Rather than move the company to the U.S., it instead moved one of its divisions to the campus and took a new 32K SF building.
“Major multinationals want to be close to those innovative smaller companies,” Cooper said.
In the first years of the joint venture with government, Harwell Oxford Partners was backed solely by management, and then U+I was brought on board as a funding partner. The sale of the 50% stake to Brookfield was a recognition that more firepower was needed to help the campus to carry on expanding.
“When we started, the balance sheet was in the tens of millions, we’ve grown it to the hundreds of millions, but it needs to grow into the billions,” Horner said. “We would have loved to do it ourselves, but we don’t have a big enough piggy bank.”
While Horner makes the point that the growth of Harwell has come about as a result of not thinking about it as a real estate play, there is still plenty of real estate to be built there, and this is part of the appeal for new backer Brookfield. There is a planning consent for another 845K SF of commercial space on the site, as well as hundreds of homes, and a wider masterplan for 5M SF of development including more than 1,000 homes, which would make the campus 10 times bigger than it is today.
“We have a significant life sciences business in North America, and we believe in the sector: a lot of the catalysts for success in the UK are in place.” Brookfield Head of Europe Zach Vaughan said. “Tenants want to cluster in centres of excellence, and Harwell provides that. We can bring our development expertise and global relationships in the sector to further expand.”
While Brookfield has plenty to do for now at Harwell, Vaughan said it would be on the lookout for other acquisitions in the sector.
"There are so many opportunities at Harwell for expansion on the existing campus," he said. "We will also look at other opportunities in the sector as they arise: we have a good track record of building businesses of scale.”
Horner and Cooper said they were also looking at other opportunities to do something similar at other sites, in conjunction with Brookfield or with other capital partners. But Cooper said there are a limited number of campuses or sites that have the unique mix of features that can make them successful, such as proximity to research or academic institutions and an existing ecosystem of people and companies that can be improved and expanded.
The coronavirus could add to the trends that are driving sites like Harwell.
“People have realised that just-in-time supply chains can be broken, and are thinking about just in case as well. You could see a trend towards on-shoring, in pharma manufacturing in particular,” Cooper said.
It is a view to which Vaughan subscribes.
“This is a long-term play, and something that we were looking at well before the pandemic. Given what is going on these days, we should see a trend towards onshoring, particularly in life sciences and critical production. Harwell is in a great opportunity to take advantage of that trend.”
Harwell is the once secret site that is secret no more, with a big-name backer and a management team that know how to market the achievements of the innovative companies that call it home. It has always been at the forefront of science in Britain; and now science is coming to the forefront of the British economy. Harwell is very much on the map.