PropertyEU toured two leading science parks in the Netherlands and discovered that interest in corporate relocations due to Brexit is growing.
It is a cloudy and overcast day in June at Leiden Bio Science Park (LBSP), in the province of south Holland in the Netherlands.
This scenic town – the character of which is defined by the University – may not be a household name in Europe, but the fallout from Brexit and the relocation of the European Medicines Agency (EMA) to the Netherlands may help put this place on the map.
The national government of the Netherlands senses an opportunity to profit from organisations in the science sector making the country their home, as the UK heads towards some form of exit from the EU.
The biggest success so far has been the Netherlands winning the bidding contest to host EMA after it left London, via a bidding process decided by a lucky dip which saw the then-EU president pull the city’s name out of a bowl.
But what about stage two? Leiden bio science park – geographically the largest of 10 science parks in the Netherlands – is a good place to start assessing what is happening on the ground.
All the science parks in the Netherlands have been directed by the government to collaborate in order to try and reap any benefits. The hope is to avoid the process becoming a dog-eat-dog scrap for tenants, and instead a unified push.
At LBSP, the Brexit effect is tangible. A rough estimate has enquiries from companies considering moving to the park shooting up 20% since the Brexit vote three years ago. Its distinguished scientific heritage burnishes its credentials as a centre of excellence.
On the walk from Leiden Centraal train station a building called De Stal is visible. This is a ‘grand café,’ which serves as the heart of the park’s social scene. But before it became a social hub, De Stal - The Stable in English – was home to Herman, the world’s first genetically modified bull. This bovine, transgenic scientific miracle received human gene implants in 1990, and lived out his dotage at De Stal with two cloned cows for company.
Research labs
But De Stal is only one building on Leiden Science Park, which is geographically the biggest of its type in the country. Covering an approximate 600,000 m2, some 19,000 people work here at 200 companies, including anchor tenant Johnson&Johnson.
Remarkable work takes place here behind decidedly quotidian facades. For example, ProQR was founded by a man desperately looking to find a cure for his son’s cystic fibrosis. It researches RNA treatments for severe genetic disorders. Meanwhile, located in four ‘BioPartner’ buildings are 60 start-ups hustling to make the next big breakthrough.
Located near to them is BaseClear, a contract research lab for DNA-based analysis founded by Bas Reichert and Erna Barel, who started the lab as alumni of Leiden University and then hit the jackpot, going from a two-person start-up, to the biggest independent genome specialist in Europe. It occupies one of LBSP’s few eye-catching buildings; a multi-storey shiny, silver coloured statement of success. It too started out small in one of the bio-partner buildings.
The landowner, Leiden University, sits adjacent to the park. Despite the concentration of companies and people, plenty of space remains to build on. Since opening in 1984, LBSP has developed around 350,000 m2 of space, meaning a plentiful 250,000 m2 can still be brought into action to capitalise upon an increase in demand from a Brexit boom.
To some in property investing, this rate of development may appear slow. For one potential cause, look no further than the law; The University is forbidden from developing the land itself and it signs no more than two tenancy contracts each year, which are very long, at 50 years each. It is a stable, long-term system which has worked okay to date.
On the downside, some of the buildings look a little tired. LBSP is unmistakably a place of work, and not for hanging out. At present, there are very few reasons to remain on/site after a long day in the laboratories or the office.
Move to mixed-use
But steps are being taken by the University to change this. Driving a push towards mixed use is the imperative of keeping the element which makes LBSP a success; talent. Today’s graduates like to mix work with pleasure in one place – our guide tells us. In order to keep the talent pipeline from Leiden University flowing, LBSP is becoming more mixed-use.
New bars, restaurants and even a theatre space are due to open over the next five to six years. New restaurant ‘Lab 071’ has recently launched and points the way to the future. Meanwhile, residential is also in the mix. In a far corner of the park is a building site where construction of 1,200 residential units is under way by Chinese firm, Yisheng Development.
When completed, it will comprise an even split of student accommodation and market rental units. Elsewhere, two more residential development projects are to be put out to tender soon, with developers Kadans and Dura Vermeer reportedly in the running.
Harry Flore, an industry veteran and chairman of HAL Allergy Group, which occupies a building developing allergen immunotherapy symptoms, is optimistic the Netherlands can scoop up companies departing Brexit Britain. He reckons the number could eventually exceed the upper estimate of 250 being touted at present. ‘Even more than EMA coming to the Netherlands, Brexit itself will have an ongoing effect,’ he says.
Amsterdam Science Park
After Leiden, we visit another scientific cluster, this time Amsterdam Science Park. Our guide, Leo le Duc, is director of science and business here and previously worked at the Ministry of Education, Culture and Science, as head of sciences and humanities at the Directorate of Research and Policy. There, he led a team of specialists and policy makers in scientific fields such as biology, aerospace, and astronomy.
Le Duc has no doubt the Brexit effect is real. ‘The EMA moving to Amsterdam has really put Amsterdam on the map,’ he says. ‘The organisation has a lot of indirect influence and the fact it is here means people are noticing us now.’
Located in the capital city, Amsterdam Science Park (ASP) has the University of Amsterdam’s science faculty at its heart. The whole campus and park comprises around 200,000 m2 of developed space, with 120,000 m2 as-yet unutilised. Around 1,200 students call it home, sharing their living space with around 3,000 researchers across five scientific fields and 2,000 employees who work at 160 businesses.
Unlike in Leiden, the university owns a minority share of the land the park occupies, with the local council and the Dutch Research Council holding around 45% each. ASP is ahead in being a mixed-use location. There is a recently opened sports hall, not far from a beach volleyball court and cuboid climbing wall. A bar is thronged with students enjoying the sunshine and more lounge around on patches of grass.
No tenant incentives
In contrast to Leiden, there appears to be little appetite for growing the tenant base at ASP. Indeed, it refuses on principle to offer incentives to potential occupiers. This came as a shock to one Japanese firm whose representatives had been hustling for concessions according to reports.
Disinclination like this is understandable with the occupancy rate running at almost 100%. ASP prioritises how well a potential tenant might fit above commercial considerations. However, the park currently seeks a high-profile company capable of bringing extra prestige, as it lacks a high-profile anchor tenant. The place has nothing like Johnson & Johnson.
The science faculty works on Artificial Intelligence (AI), data management, sustainability and more. And it is growing fast; student numbers are increasing by 15% each year. Just like at Leiden, links between industry and academia are strong. Major companies hire teams of postgraduate student researchers for cutting-edge projects. Right now, Bosch is developing artificial intelligence (AI) image recognition for a new self-driving car. Online retailer Bol.com – the Dutch Amazon – is researching ways of using AI to turbo-charge customer behaviour analysis, while the Dutch police force has hired students to help it use AI to detect crime online.
Two buildings stand out in the park. The tallest properties on the site are multi-storey data centres. These cathedrals of information are unique in the Netherlands for having been built skyward, instead of single-storey as usual. One is clad in eye-catching monochrome, while the other has a more discreet pastel colour scheme. Its residual heat – of which there is plenty – keeps 450 student flats nearby warm.
As far as scientific pedigree goes, there are some things to shout about. The first email ever sent to the US from Europe was sent from here in 1988. ASP is also at the centre of a worldwide web; the cables which span continents and together comprise the underpinning of the internet, all converge here and emerge from their catabasis. The world’s second-ever website was made here, while ASP is also home to one of the few remaining German Enigma coding machines used by the Nazis during World War II. It also hosts the servers for the massively successful video game, Fortnite.
In different ways, the science parks in Amsterdam and Leiden offer plenty to companies mulling their future in the context of Brexit. The UK government is pouring hundreds of millions of investment into the life sciences, in a bid to remain attractive to industry. It remains to be seen who will win the tug-of-war. But if the 10 parks in Netherlands can keep up their unity of purpose, the country could yet benefit from Brexit.
New post-Brexit HQ for EMA in Amsterdam’s Zuidas district
The European Medicines Agency is one of the EU’s biggest regulators, responsible for upholding pharmaceutical standards across 27 member states. Established in 1995, it was based in London at Canary Wharf on a 25-year lease, until the Brexit vote in 2016 triggered a decision by member states to move it.
In late 2017, Amsterdam was selected in a controversial process. The winner was chosen by lucky dip and the losing bidder, Milan, complained Amsterdam lacked a permanent home for the organisation, which employs 900 people. The regulator then lost a court case brought by its former London landlord to enforce its €561 mln contract.
Relocating to the Netherlands has reportedly cost EMA up to 10% of its workforce – potentially exposing the regulator to lawsuits from pharma companies, should disruption cause product launches to be delayed. The agency is temporarily housed in Sloterdijk in the north of Amsterdam but construction is underway, by CGREA, on a new headquarters in the Zuidas district to the south of the city.
ASR Real Estate launches 1st dedicated Dutch science park fund
The first-ever investment fund in the Netherlands to focus exclusively upon science parks has recently been launched by ASR Real Estate.
In a sign of confidence in the sector’s long-term prospects, ASR is targeting a €500 mln-plus cap from institutional investors for its perpetual fund. It launched on 1st March, with plans to begin purchasing assets during the second half of 2019.
ASR fund manager Luc Joosten lists the qualities of science parks as high occupancy rates - averaging 95% across all 10 sites in the sector, a rental base with capacity for growth, strong demand and scope for development.
By being research and development hubs, parks become attractive investments because this helps insulate businesses against market cycles. For example, Hal Allergy, which is located at Leiden Bio Science Park, was completely unaffected by 2008’s Great Financial Crisis, according to chairman Harry Flore.
‘Science parks have many of the qualities of core assets, but not everybody has noticed this in the past,’ says ASR's Joosten. ‘We really believe in this sector and that it’s going to grow. We are experiencing some momentum in terms of demand from potential tenants.’
ASR is keen to point out its decision to launch the first Dutch fund for science parks was not influenced by Brexit and the possibility of a rise in tenants leaving the UK. The way science parks operate is changing with the times, as owners break with their traditional narrow focus by developing mixed and shared use, in a bid to attract talent and new tenants.
‘We see a lot of willingness from park owners, who are asking themselves how they can be inviting places for people to be in at the end of the working day,’ says Joosten.
