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£15B Chasing UK Life Sciences As Sector Poised For A Record Year

New lab space at Canary Wharf: How it could look

Up to £15B of live capital is looking for a home in UK life sciences real estate — and the first three weeks of 2023 show it could be a record year as the shortage of good modern premises begins to bite and export potential grows.

Data from Savills suggested that, just 18 days into 2023, assets worth £200M are under offer in the key Oxford-Cambridge Arc, where much of the sector is based.

Despite increasing economic uncertainty, Savills said total investment in the arc in 2022 nudged up slightly by £50M to reach £1.65B. 

The arc is the core of a UK life sciences sector worth £89B to the economy in 2020, and likely to be worth more now. 

“Despite the headwinds in the second half of 2022, the buyer pool for the science sector remains extraordinarily healthy," Savills Investment Director James Emans said. "Of the stock that was traded last year, there were over 20 different purchasers and we would anticipate there to be nearly three times this number who would consider themselves active across the Oxford and Cambridge investment market going into 2023.” 

Notable Arc deals included Legal & General's sale of 194-198 Cambridge Science Park to Cadillac Fairview and Stanhope for £85M, and the sale of joint venture Pace Development’s 301K SF Botanic Place to Railpen, in what will become a £500M development. In Oxford, Life Science REIT acquired Oxford Technology Park for circa £180M.

“Occupiers in the life science sector are desperately in need of good quality accommodation within the Oxford-Cambridge Arc," Savills Head of UK Science Tom Mellows said. "The severe supply shortage is being addressed by significant investment into future development sites, and we expect to see a number of our clients speculatively develop high-quality laboratory schemes within the next 12-24 months.”

The new life sciences tower at Canary Wharf

A similar shortage in London is prompting bold developer action. Shortly before Christmas Canary Wharf Group and Kadans Science Partner submitted a detailed planning application for an 823K SF 23-storey state-of-the-art commercial health and life sciences building at Canary Wharf.

The “vertical campus” will be located at Canary Wharf’s North Quay and represents the first phase of the creation of a 3.5M SF centre for health and life sciences. Up to 60% of the tower will be laboratories.

Several science-led businesses are already located in Canary Wharf including Genomics England at One Canada Square

However, the sector is not without its obstacles. The UK government is positioning the sector for export-led growth, after a thin period in which export volumes declined by 3%, according to a recent analysis by the UK Department of International Trade.  Speeding up clinical research is expected to help increase export growth, according to analysis of the life sciences sector’s global competitiveness. Today exports account for £24B.

Mellows is one of the panellists at the 2023 Bisnow Annual Life Sciences Real Estate conference on Thursday 2 March, hosted with partners Imperial College London, Stanhope and Cadillac Fairview. Tickets and details can be found here.