Life Sciences Sector: “Alive and Well”

There have been mutterings that the life sciences sector could be slowing down, comments that it has been unable to sustain the boom in investment that was partly down to the spotlight shone on it throughout the COVID-19 pandemic. Much of the commentary over the last few years has focused on the lack of space for life science businesses, with demand far outstripping supply and some argue this is no longer the case. 

It is true that supply and demand has balanced out. This is, in part, because a number of development projects have completed, providing sought after R&D space and partly because we know investment levels from venture capitalists and investors has dropped off a little, particularly in respect of entities which are less established. However, generally, leasing remains steady and above average with headline rents the same or at an increase in relation to previous years.

In addition, in the round, investment actually looks quite strong - Cushman & Wakefield report that funding invested in UK life sciences is up 3% on the five-year quarterly average. The backdrop to this is that investors are streamlining their investments into fewer companies and this might be what gives the appearance of less investment opportunity, particularly in respect of smaller outfits and maturing spin-outs. Notwithstanding this, the market remains confident that pension reforms will encourage investment in the sector, something that the main political parties have committed to continue should there be a change in government after the July election. 

After the pandemic, it was argued that developers with a lack of experience were attempting to make their name in the market whilst it was hot, potentially depleting real quality in the space. This does not appear to have stuck and those with deep sector knowledge, who are able to provide high-spec, flexible and purpose-built life science space are emerging as favourites for tenants as well as with property investors. These developers continue to contribute to supply with “2.8 million sq ft of life sciences space under construction across the Golden Triangle” and 24% of the same pre-let. This includes developments at Granta Park and Babraham, Cambridge which Charles Russell Speechlys LLP continue to advise longstanding client Biomed Realty L.P, on. 

The UK Bioindustry Association reports that all three major political parties have committed to delivering the Advanced Manufacturing Plan which includes £520 million to support life sciences manufacturing between 2025 and 2030. As such, it is clear that the support at a government level is there and ultimately, the outlook for the life sciences market is bright. It has made the most of the peak to establish itself as a key industry for investment and high quality development for the foreseeable.