The low-profile developer behind a major King’s Cross life sciences scheme will push on and complete the project, even after global pharmaceutical giant Merck pulled out of the building.
Merck said on Thursday that it would not occupy the 180K SF Belgrove House building because the UK was “not competitive” for pharmaceutical companies due to the lower price of drugs compared to other countries.
Merck's lease is still intact.
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It is part of a major global cutback on research — and associated real estate — being undertaken by Merck as it deals with the impact of U.S. tariffs and a pullback in life sciences investment.
It is also vacating space it uses at the neighbouring Francis Crick Institute. The move will eliminate 125 jobs, mostly scientists, and 800 people were set to work in the building that now won’t be occupied.
Belgrove House is owned and being developed by Precis Advisory, a company that is ultimately owned by the Lalji family, which is also one of the owners of Access Self Storage and several hotel brands.
Access’ UK portfolio of 60 facilities was put up for sale for £1B earlier this year, but the sale was ultimately terminated.
Belgrove House is being built on the site of a former Access facility. Plans were put in place in 2019 to turn it into a 180K SF life sciences facility with offices and labs split 60-40 so Merck’s research and corporate functions could live together in one facility.
Merck was named in planning consultation documents starting in 2020 and in 2022 formally agreed to take a lease on the building that it described as long-term, although the length and terms of the lease have not been made public.
Merck said in a statement Thursday that it would not occupy the building, but it has a contractual lease in place that has not been terminated. Talks between Precis and Merck about what happens now with that lease are set to take place in the coming weeks.
Mace was awarded a £150M construction contract in 2023 to build the shell and core of the building, and construction commenced that year. Last year, Sisk was awarded a £125M fit-out contract by Merck.
The building was described as a £1B investment once equipment and other costs from Merck were added in.
Mace will complete the build-out of the shell and core, but Sisk’s fit-out has been put on hold. The project was scheduled for completion in 2027.
Documents at Companies House show that the special purpose vehicle that owns the development has taken out a debt facility, although the size of the facility has not been specified.
Depending on the outcome of talks with Merck, Precis will now have 180K SF to fill in one of the most sought-after locations for life sciences in London. But it was built with a particular tenant in mind, and life sciences takeup has slowed because of the downturn in venture capital investment.
The situation will also have a knock-on effect for other owners and developers in the area. The presence of a global pharma giant like Merck was a draw that might bring tenants to other nearby buildings.
Bisnow's Life Sciences and Healthcare Summit is being held in the heart of King's Cross next week. Sign up here to see how the industry absorbs this news.
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