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Life Sciences Investment Shines Across Golden Triangle As Demand Outstrips Supply

Supply is unlikely to catch up with demand until 2025-26, according to Knight Frank.

Real estate investment for the UK’s life sciences sector in the Golden Triangle totalled more than £496M in Q1 2023, according to broker Knight Frank.

That was the highest first-quarter investment total on record for the sector and the best quarter for investment since Q4 2021 for the area spanning London, Cambridge and Oxford.

However, demand far exceeds supply and the area is struggling to cope with an influx of new players looking for space.

London made up 79% of the investment total, reflecting its growing role as a hub for Europe’s leading life sciences companies, particularly in the submarkets of King’s Cross, White City and Canary Wharf.

Q1 life sciences lab take-up in the Golden Triangle totalled 87K SF, while life sciences office take-up in the region totalled 62K SF, cumulatively 127% above the same period in 2022.

Notable London deals included the acquisition by a GIC and British Airways’ New Airways Pension Scheme joint venture to develop circa 443K SF of lab space at Tribeca in King’s Cross in conjunction with Reef Group; and a GIC and Oaktree joint venture also purchased 17 Columbus Courtyard in Canary Wharf from Macquarie for circa £100M.

Meanwhile, U.S.-based New England Biolabs signed for its first overseas manufacturing and product development facility at a 30K SF unit at Milton Park, Oxfordshire. ADC Therapeutics expanded its presence at the I-HUB in White City, taking an additional 12K SF, and Moderna has committed to a 145K SF production facility at Harwell, subject to planning.

However, the Golden Triangle is severely constrained by a lack of available space, Knight Frank warned.

It estimated that in Cambridge alone there is demand for over 1M SF of lab space but only 24K SF currently available and the development pipeline means demand will not be met until at least 2025-26.

There is a similar supply and demand imbalance in London and Oxford, likely to be exacerbated by the continued growth of the sector. Q1 2023 saw the formation of 283 new life sciences companies in the UK, the most of any quarter on record.

“The UK life sciences sector is in a period of sustained and rapid growth, attracting capital from a range of sources including sovereign wealth funds, public pension plans and private equity as well as venture capital,” Knight Frank Head of Life Sciences and Innovation Emma Goodford said. 

“The sheer scale of growth of the life sciences occupier markets in Oxford and Cambridge continues to outstrip delivery, leading to an acute shortage of Grade A lab and office space. It is critical that more is done to incentivise the development and repositioning of modern, fit-for-purpose life sciences lab and office space,” she added.