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Laboratories In Former Department Stores Will Be A Thing In 2021


The £55M sale of the Debenhams brand to Boohoo assures an online future for the troubled mid-market UK department store. It also means the closure of all 124 remaining Debenhams department stores.

Some Debenhams stores are already on the path to a new life. Last week Manchester City Council granted planning permission for the conversion of a 466K SF building previously occupied by the retailer into 298K SF of offices, 40K SF of leisure and 27K SF of hospitality. German landlord AM Alpha bought the building in 2017, paying £89M and inheriting a Debenhams lease until 2039.

However, research by Savills suggested that department stores could make ideal locations for the flourishing UK life sciences and biotech sector.

Bisnow is holding a digital summit on the UK life sciences sector, with big name speakers from Blackstone, BioMed Realty and many more. Sign up here. 

Savills said that a pre-pandemic shortage of laboratory space is driving life sciences businesses to look at novel new property solutions. This has combined with a surge in capital raising from private equity, IPOs and venture capital, providing life sciences occupiers with a war chest ready for investment and growth.

At the same time life sciences occupiers want to win talented staff by offering high levels of amenity, which out-of-town sites struggle to provide. They also want to improve their secretive public image by choosing conspicuous locations. 

Savills said there are around 100 potential former retail locations in London that could be converted to other uses, amounting to a total of 1.8M SF. The firm is already advising on three potential department store-to-laboratory conversions, including one in London that offers the occupiers valued proximity to a major hospital.

“There is significant appetite from the life science sector,” Savills’ Retail Research Director Tom Whittington said. “Increasingly, the life sciences want to be visible and in areas where they have a lot of strength — Oxford, Cambridge, London — the large floorplates of department stores lend themselves to conversion into laboratory and research space.” 

“[In the] trinity of core locations for life sciences, namely Oxford, Cambridge and London ... their historic nature, size and strength of competing uses, means that available sites are not easy to obtain by developers and occupiers,” Savills' Reimagining Retail report said.

“Vacant retail units and department stores offer relatively larger units in prominent locations, which provides the opportunity of being repurposed for laboratory uses. The generous floor-to-ceiling heights [provide] the ability to accommodate the necessary air handling plant to service laboratory space,” the report added.

“As well as the larger units, a retail unit and associated floorspace above, which may include offices, is also worth considering.”

Savills said that even before the coronavirus pandemic, the level of investor and developer interest in the life sciences commercial property sector had increased. Laboratory floor space "had been an ‘alternative’ commercial property sub-sector, in most cases, developed by specialist investors/developers, but now there is interest from all types of investors and/or developers looking to review the opportunities," the report said.

"Of course, the need for the global scientific community to deliver a vaccine for Covid-19 has also intensified the focus and interest in the science-related property sector even further, with the past six months seeing an explosion of interest from investors looking to diversify their portfolios to capture the expected increase in demand from life science companies."

Bisnow is holding a digital summit on the UK life sciences sector, with big name speakers from Blackstone, BioMed Realty and many more. Sign up here.