Four years from now, if everything goes according to plan, life sciences real estate developer Kadans Science Partner will double London’s supply of laboratory space with just one building.
The company’s work with Canary Wharf Group to build a 22-storey tower on the Docklands estate could be a crucial part of carving out a new life sciences hub in the area. British Land’s nearby Canada Water regeneration is also targeting science and technology tenants.
“The [Canary Wharf] scheme is 800,000 sq ft gross, roughly the same as every single bit of commercial lab space in London right now,” said James Sheppard, Kadans’ managing director for the UK and Ireland, on EG’s recent life sciences podcast. “So in one building, we will double the volume of space. One of the big learnings we have seen from other successful clusters, both in London and outside, is developing a critical mass of organisations. I use that loose term ‘organisations’ because it isn’t just businesses or academics or clinicians. The clusters that flourish tend to have a kind of balance of all three.”
Bloomsbury vs Boston
Sheppard joined a discussion held by EG during London Real Estate Forum week to explore life sciences and labs in London. What has the city done right so far to encourage clusters of industry companies to locate alongside one another, and what opportunity remains to be grasped?
The hotspots are well known, principally the Knowledge Quarter around King’s Cross, Euston and Bloomsbury. But other areas are making their presence felt, including White City to the west, King’s Health Partners to the south, and Whitechapel and Canary Wharf to the east.
Still, the real estate numbers are stark. “Existing lab supply in London right now is sub-350,000 sq ft,” said Matt Fitter, investor and developer lead for life sciences at JLL. “We all love to make a comparison with Boston, but we talk [there] about 30m sq ft. The population of London is something like 15 times that of Boston, and we are at 1% of their supply. That shows that there’s a pretty long way to go.”
Fitter and colleagues at the agency are tracking more than 5m sq ft of potential space coming through in the capital between now and 2030, with some 80% due for 2026 onwards. Only 3% of that is under construction; 15% is consented and 50% is yet to enter any form of planning process.
What’s holding supply back?
Competition for land remains a challenge. “The London office market has historically been incredibly strong, which means it has just been too easy for developers to build an office and let it to a tech company, a law firm or a financial services institution. Job done. Move on to the next one,” said Sheppard. “There hasn’t been the requirement for people to get innovative.”
The planning system too has posed problems. “Our planning policy – the London Plan and local plans for boroughs – were not written with life sciences in mind,” said Fitter. “Look at somewhere like Camden, for example, where if you’re going to extend a building then the additional space in the central activity zone should be 50% residential. That creates some challenges when you’re doing an office building – and it creates a whole heap of additional challenges when you’re doing a lab building.”
Must be the clusters
The cluster effect means everything to life sciences, and the ability for organisations of all types and sizes to locate in close proximity to one another is a significant driver of how the built environment is designed and developed.
“When it comes to clusters in the UK, it’s really interesting to see how much knowledge is found in a very small area of London and the Golden Triangle,” said Ivana Poparic, head of life sciences cluster development at MedCity.
“There is nowhere else in the world where you have six universities that are among the top 40 or 50 in the world for life sciences and medicine. On top of that, you have the clinical infrastructure of a world research centre and the very high concentration of bright people, a population that you can work with, multicultural and ethnically diverse. That brings together everything you need to develop new products that are biology or chemistry based.”
With the private sector and academia working together effectively, how crucial is government support? Given some industry worries over what seems to be diminishing interest in the Oxford-Cambridge Arc, should other cities, including London, be concerned?
“I think it would be foolish to complain,” said Poparic. “We are the third country in the world in terms of R&D investment. If we said it’s not enough, I think we would sound spoilt. But there are still opportunities to broaden that. A lot of government funding went to traditional life sciences players like universities and the NHS. That can be broadened, and there could be more involvement from local government to ensure that we are developing the right type of solutions in terms of medicine and new technologies… There should be more funding for very early-stage companies.”
Sven Bunn, life sciences programme director at Barts Health NHS Trust, on the other hand, doesn’t mind complaining. “I am not going to be afraid of sounding spoilt, because I think as a country we spend a smaller proportion of our GDP on research and development than most other developed countries,” he said. “I think there is a gap and an opportunity. I also think there is something strategic about having left the EU, thinking about how we organise those [research] programmes.”
Get aspects like that right, find the right locations for new real estate supply and the demand is ready to snap it up. Sounds easy, right? Of course, it isn’t. But as EG’s guests agreed, London’s pluses put it in a better position than many other cities.
“Life science is inherently risky,” said Sheppard. “A lot of the employees, be that senior or executive, need to know that they are in a location where, if it does go pop in company one, they don’t then have to uproot and move to a new city or location. This is where London is superbly advantageous over a lot of other clusters – whether you are in Canary Wharf, King’s Cross, White City or the South Bank, you are within half an hour of hundreds of companies that would be looking for similar expertise.”
The panel
- Sven Bunn, life sciences programme director, Barts Health NHS Trust
- Matt Fitter, investor and developer lead for life sciences, JLL
- Ivana Poparic, head of life sciences cluster development, MedCity
- James Sheppard, managing director, UK & Ireland, Kadans
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