Political Picture Brightens For UK Life Sciences, But Oversupply Remains

To truly become mature and profitable, the UK life sciences real estate sector needs to start bagging big, global occupiers for schemes on a regular basis. And the politics of that is looking more favourable than it has in a while. 

Shifting government policy has started the process of making the UK more attractive on a global basis to life sciences firms, more than 300 attendees at Bisnow’s UK Life Sciences and Healthcare Summit 2026 heard.

Now occupiers just need to start putting their heads above the parapet and inking deals, even though global politics might not favour making moves outside of the U.S. 

An industry that has thus far focused on small and midsized companies needs to better appeal to larger companies if the development pipeline is to be absorbed.

“The VC and the small-scale stuff is really important, but actually that's not going to fill the couple of million square feet of lab space in London over a five- or 10-year period,” Royal London Asset Management Head of Life Sciences Will Hawking said. “We need that appetite from global businesses to come into the UK and lay down roots.”

Last autumn, the mood music around the UK life sciences sector was incredibly gloomy. In the space of a week, MSD and AstraZeneca pulled back from investing in new UK HQs as a result of a row with the government over how much the NHS pays for drugs and how much of a rebate it demands from drug companies on sales. 

That policy has now been eased, with the NHS committing to spending more on innovative drugs and reducing the rebate companies pay from around 20% to around 15%. That has increased the appeal of the UK to big, global occupiers. 

“Along with a fairly decent working relationship with the United States, resulting in zero tariffs on UK pharmaceuticals being imported to the U.S., this is expected to result in much more R&D investment in the UK,” Brockton Everlast CEO and co-founder David Marks said. 

Marks listed several positive deals or developments since last autumn, including Gilead taking 50K SF at Royal London and British Land’s One Triton Square building and UCB moving to a new £500M R&D campus in Windlesham in Surrey on a site previously owned by Eli Lilly.

He didn’t name the tenant specifically, but Astex Pharmaceuticals is reported to have signed a 90K SF lease to take a new bespoke building Brockton is delivering at Cambridge Science Park. 

He also pointed to the decision of the Ellison Institute of Technology to massively increase the amount of space it will build in Oxford as a signal of how attractive the UK is to global science and technology companies and research organisations. The institute, backed by tech billionaire Larry Ellison, has upped the size of the facility it is building from 300K SF to 2M SF. 

“If you had a magic wand, you'd wish that a major global R&D foundation would look across the world and decide that the UK was the right place to invest $10B and undertake leading-edge research. … The reality is, it's happened,” he said.

Hawking said the UK life sciences real estate sector needs to have the confidence that such deals will happen every couple of years, not once in a generation.

“I don't think we should be too overly concerned that EIT is going to skew the market numbers for last year,” he said. “I think we should say, ‘Where's the next one? Where’s the next one for Cambridge? Where's the next one for London?’ Rather than just sort of sitting back on our laurels.”

Corporate occupiers based in the U.S. are facing political pressure to invest in their home market, which means many are wary about making a big splash in the UK. 

Gilead’s decision to close campuses in west and central London in favor of one hub could be an example of this.

“They're probably selling it more as a consolidation, as opposed to a big new, shiny HQ expansion, because of that global appetite for news,” Hawking said. 

While the political environment is now less downbeat for investment, the real estate fundamentals are not quite so favourable. After years of hearing how demand for life sciences space was outstripping supply, earlier this year, Knight Frank said the tables had turned and it is very much a tenant’s market.

Hawking said pressure should ease, with many developers shelving new schemes until the market balance improves. But for now, it is hard to make a case for rents rising due to the choice of space tenants have, especially at the smaller end of the market. 

“A couple of years ago, if you want fitted lab space in London, you could maybe have one or two options,” Imperial College London Investment Director Katherine Fieldgate said. “But now you could spend a couple of days touring around different schemes. There’s more competition.”