The recent tie-up between Canary Wharf and Kadans demonstrates the enthusiasm of traditional UK RE investors and developers to access the lucrative life sciences market. By partnering with an experienced developer in the sector, Canary Wharf will benefit from in-depth sector knowledge gained by Kadans over many years of developing lab space, firstly overseas and more latterly in the UK market. So, what are the benefits to UK investors/developers looking to their overseas counterparts for guidance, best practice examples and a partnership to assist them in making the most of the opportunity that the growth in this market presents in the UK?

Whilst occupier demand is currently booming, and the life sciences sector is highly competitive to enter from a developer perspective. Not only is the land in the right location difficult to come by and expensive but building lab-capable space is much more expensive than an office building of the same internal area. Therefore, it is critical that the right decisions are made early on about how the buildings are designed and fitted out. An experienced life sciences developer or operator of laboratories already knows and understands the tenant market and the unique requirements of lab space. They see that re-purposing of existing stock is often a non-starter if the intention is for the building to be fitted as laboratories or at least “lab-capable” unless the fundamentals of the building already work.

Likewise, a life science developer knows how to design new buildings to make the best use of the available space. Any floors in the building will need a higher floor-to-ceiling height than an office would. Laboratories need increased utilities capacity to support all of the equipment likely to be required, including backup generators. Most lab spaces will need easy and secure access to chemical storage and sufficient loading bays and transport lifts. The experienced developer knows the types of equipment that will likely be needed by its eventual tenants, how much electricity they might use and what the tenant fit-out may look like. They may already know and work with an experienced team of professionals who know how to design and build the space.

A further benefit may be the existing relationships that an established life sciences developer has, perhaps in other areas of the country or even other jurisdictions. Life sciences is an international sector – you only have to look at the breadth of companies developing covid 19 vaccines to appreciate that.

Many established life sciences and pharmaceutical companies in the US, for example, will have little or no experience in the UK property market. This is where an established developer, perhaps in partnership with a UK entity, can add value to prospective tenants. Guiding them through the process of taking their first UK premises, from finding the right location, ensuring the premises are going to be suitable for the particular requirements of that tenant, making introductions to local professionals with sector knowledge and generally assisting with making a move to a new jurisdiction as smooth as possible.

From the perspective of the life sciences developer, why might they need their inexperienced UK counterpart? The simple answer may be that the UK entity has land and local market knowledge, perhaps including relationships with the all-important local planning authorities. A UK investor/developer with an established reputation and a track record of delivery may be favoured in competitive tender scenarios, which could be the difference between winning or losing a pitch.

It is going to be very interesting to see whether the Kadans and Canary Wharf partnership is a new model for life sciences development in the UK market. The opportunities in the market are clear for those that can combine the right sector development expertise with local knowledge and access to or existing ownership of land in the right location. The benefits to each side are clear, and we might expect to see more tie-ups like this in the coming months.

Written by Louise Ward. 

An original version of this article was first published on EG on 16 May 2022. For more information, please contact Louise Ward or your usual Charles Russell Speechlys contact.