Now is the time to maximise the life sciences growth opportunity

Recent months have seen an uptick in activity within the UK’s life sciences sector. Reports of mergers and acquisitions over the $1bn mark have come on the back of the launch of the government’s £650m ‘Life Sci for Growth’ package. The sector looks set to be boosted further by the UK’s return to Horizon Europe, which gives researchers the chance to apply for grants from a €95.5bn pool of funding, and further initiatives promised in the autumn statement. So, with the future looking bright, how can developers make the most of these opportunities?

Location, location, location

The chronic shortage of lab space across the UK remains one of the greatest hurdles when it comes to meeting the demand for growth. While space is scarce, the question of where to build new facilities is fundamental and can have a direct bearing on the success and profitability of projects.

The popularity of the “Golden Triangle” across Cambridge, London and Oxford, coupled with the imbalance between supply and demand, has seen rental premium for labs in the area rocket to 70% higher above that for conventional offices. In London’s nascent King’s Cross lab market, for instance, fitted labs already rent for more than £100 per sq ft. However, the significantly higher acquisition costs in these areas mean that more upfront investment is needed to get projects off the ground, making it harder for companies to enter the market.

While building labs in established clusters promises a return on high acquisition costs, developers should consider taking the advice of Kirsty Allsop, who co-presents the Channel 4 show Location, Location, Location: the best deals may be in less obvious places. For life sciences, this could mean looking further north.

The potential for hubs and partnerships beyond the Golden Triangle is already being tapped. Newcastle, for example, last year put out a call for an investor to accelerate the delivery of its £1.7bn life sciences ‘eco-system’. Meanwhile ID Manchester, a University of Manchester and Bruntwood SciTech partnership has a joint venture with Innovate Cambridge that will create new links and is set to draw on the strengths of both locations to attract new investments and foster collaboration.

Managing the supply chain

When building life sciences facilities, proactive supply chain management is critical. Where developers previously relied on costs and timeline forecasts, the base rate increases seen since December last year show this approach might not be enough to navigate any future disruption.

Linesight’s UK Country Commodity Report for Q2 2023 shows improved stability for markets. However, developers should maintain a proactive approach to ongoing market analysis and enhanced real-time tracking to gain the insights needed to anticipate cost increases and supply shortages. Flexibility and risk mitigation strategies will also form the foundation of robust supply chain processes moving forward.

Tracking scientific breakthroughs

With research and technology evolving at pace, occupier needs are changing quickly. High-growth areas include AI-powered drug development, using the potential of data and AI to accelerate scientific advances, are proving popular, with an increasing number of collaborations between big-pharma and BenevolentAI already in place.

By tracking pipelines and advances in life sciences research, developers can identify which facilities are more likely to be let quickly, thereby providing a faster return on investment for clients. Likewise, while it is important to tailor facilities to specific uses, building flexibility into design can be key to successful projects, allowing the development to accommodate occupiers whose needs could also change quickly.

Building for the future

Life sciences is a notoriously energy intensive sector, making it one of the most at risk sectors when it comes to rising energy costs. Improved operational energy performance and consideration for renewable energy sources is a must for developers and occupiers. So, consideration should be given to efficiency strategies that combine heat pumps, photovoltaic panels and natural light, for instance. The sector is also coming under growing pressure to be more sustainable overall. To deliver schemes with longevity, it is important to consider sustainable construction materials and commutability to enhance both environmental and social credentials.

As a rapidly growing industry, the life sciences sector is in prime position to lead the way in terms of sustainability, allowing companies to not only assist in future proofing their assets but also gain a strategic advantage in an increasingly competitive market.

With growth on the horizon, the UK is being presented with an exciting prospect: the chance to pave the way for innovation not just in scientific research but also life sciences real estate. This is too good an opportunity to be missed by developers.