Investment into commercial real estate for the UK’s life sciences sector in the so-called golden triangle, the area spanning London, Cambridge and Oxford, totalled over £496 mln (€564 mln) in Q1 2023, according to Knight Frank.
This figure represents the highest first quarter investment total on record for the life sciences sector and the best quarter for investment since Q4 2021.
Notable deals over the period include the acquisition by a joint venture between GIC and British Airways’ New Airways Pension Scheme to develop a 443,000 ft2 (41,000 m2) of lab space at Tribeca in King’s Cross in conjunction with Reef Group.
A GIC and Oaktree joint venture also purchased 17 Columbus Courtyard in Canary Wharf from Macquarie for £100 mln, demonstrating the diversity of capital seeking to deploy equity within the sector.
London represented the largest share of investment activity in the Golden Triangle, making up 79% of the total. This reflects London’s growing role as a hub for Europe’s leading life sciences companies, particularly in the submarkets of King’s Cross, White City and Canary Wharf where significant new developments to deliver Grade A lab and office space are either underway or have been recently completed.
Q1 life sciences lab take-up in the Golden Triangle totalled 86,876 ft2, while life sciences office take-up in the region totalled 62,277 ft2 over the same period.
Overall, take-up in Q1 was 127% above the same period in 2022. Key deals include US-based New England Biolabs, a producer and supplier of enzymes, signing for its first overseas manufacturing and product development facility at a 30,000 ft2 unit at Milton Park in Oxfordshire.
ADC Therapeutics, an oncology-focused biopharma company, also expanded its presence at the I-HUB in White City, taking an additional 12,000 ft2. Notably, Moderna has also committed to the delivery of a 145,000 ft2 production facility at Harwell, subject to planning approval.
Despite this increase, take-up figures in the golden triangle are severely constrained by a lack of available space, the research found. Knight Frank estimates that in Cambridge there is currently demand for over 1m ft2 of lab space in the region but only 24,000 ft2 currently available.
The current development pipeline indicates that this level of demand will not be met until at least 2025/26, with a similar supply and demand imbalance in London and Oxford.
Emma Goodford, head of life sciences and innovation at Knight Frank, commented: 'The UK life sciences sector is in a period of sustained and rapid growth, attracting capital from a range of sources including sovereign wealth funds, public pension plans and private equity as well as venture capital.
'The sheer scale of growth of the life sciences occupier markets in Oxford and Cambridge continues to outstrip the delivery of new schemes, leading to an acute shortage of Grade A lab and office space in the UK’s most in-demand markets.
'While it is encouraging to see the government prioritise the UK’s potential as a leading global hub for life sciences, it is critical that more is done to incentivise the development and repositioning of modern, fit-for-purpose life sciences lab and office space if the sector is to capitalise on, and keep pace with, record levels of demand.
'Equally important is the experienced capital to support the scaling of some businesses in the sector now experiencing rapid growth.'
