The future of Canary Wharf has rarely seemed in so much doubt. The decisions of big tenants such as HSBC and law firm Clifford Chance to leave their headquarters in the Docklands estate and move elsewhere in the capital has many in the real estate industry and business more broadly asking what will become of the area.
The answer, according to Canary Wharf Group and its new partners, could come from the life sciences sector.
Kadans Science Partner, a Netherlands-based labs developer, has made waves recently as a partner to CWG as it pushes to make the estate a new hub for the industry.
Kadans, for its own part, has set out an ambition to become a leading serviced lab space operator across the UK, catering to small life sciences companies.
The company’s London Innovation Centre concept, which provides 40,000 sq ft of workspace, occupies floors four and five at 20 Water Street, E14. The building, measuring 134,000 sq ft, forms part of the wider North Quay scheme being delivered by CWG.
Although the development was initially intended as an office tower, the team at Kadans believes lab demand in the capital allows it to do something different, and so the company is bringing forward containment level 2 lab spaces in the block. The firm has fitted out its floors in the building to provide a split of roughly 60-40% lab to office space, offering suites from as little as 250 sq ft and, in a rarity for the developer, shared lab space.
“It’s not a million miles away from what Kadans has done in the past, but we want to keep moving to deliver new products,” says Kadans managing director James Sheppard. “It’s an evolution. We’ve always been an operator, by which we mean we’ll do everything up to the front door of your lab, and everything inside your lab is going to be your responsibility. Historically, that meant all of the equipment being in a tenant’s lab but now we’ve moved it out.”
1970s sentiment
As such, floors four and five at 20 Water Street are equipped to provide centralised, shared lab facilities, featuring autoclave machines, glass washers, ultra-low temperature freezers and more kit that will be on the must-have list of life sciences tenants.
Larger workspaces are located on the fifth floor and divided into three parts: entranceway and storage, main labs and write-up areas. There are also meeting rooms, breakout spaces and terraces on each of the two floors.
“The way we design labs hasn’t changed since 1970s,” says Sheppard. “But outside of the universities, there isn’t anybody delivering this type of space.”
Sheppard’s favourite spot in the building is in a corner of the fourth floor. It is a so-called “project space”, featuring individual benches and workstation islands. The space was created to support start-ups or provide temporary space for mature life sciences companies working on a short-term project.
“There’s a huge supply-demand imbalance, and this space will help alleviate some of that backlog by targeting these very small companies,” says Sheppard.
That supply-demand imbalance was also highlighted in recent data from Knight Frank, which showed active lab requirements across the Golden Triangle currently stands at 2.2m sq ft. In the meantime, the region is only able to provide 385,000 sq ft of immediate supply.
Ecosystem before buildings
Kadans wants 20 Water Street to become a catalyst for the life sciences community to put down roots in Canary Wharf, helping the district to emerge as a new research and development hub for the capital.
Some industry figures privately question whether the plans will work. Sheppard understands some degree of scepticism. “We took a risk on the location,” he says. “This isn’t King’s Cross, this isn’t White City, this is a new location [for life sciences], so we need tenants that are willing to take that risk.” Tenants such as gene therapy company AviadoBio, which took space at the site this summer.
In return for what might be seen as a leap of faith from occupiers, Kadans is offering flexible lease structures with an option to sign a deal for as little as 30 days. “The reality is, it takes longer than 30 days to set up a lab, but we would love to give an option to our tenants to move somewhere else if things don’t go well,” Sheppard says.
The decision to bring a new serviced lab concept to Canary Wharf builds on the partnership established between Kadans and CWG last year. The two have joined forces to develop what they claim will be Europe’s largest commercial lab, which will cost £500m to be built.
The wet lab-enabled 22-storey tower, spanning 750,000 sq ft, is expected to house start-ups in an incubator-style environment alongside growing SMEs.
Sheppard says: “We want to start getting people here [to Canary Wharf] and start getting people comfortable. The risk is waiting until 2026 and not doing anything and then having to build the ecosystem at that moment in time once the building is complete. That’s why we want to start building an ecosystem now.”
Golden thread
Kadans’ transition to managing more complex properties started with the retrofit of a former warehouse within the Stevenage bioscience campus in Hertfordshire, turning it into a 103,000 sq ft life sciences facility known as Sycamore House. Since then, the concept has continued to evolve with a number of developments either in construction or soon to be started. These include 4 and 5-10 Brandon Road and 18-20 Tileyard Road in King’s Cross, N1, Merlin Place in Cambridge, Upper Brook Street in Manchester, and Health Innovation Hub in Glasgow.
In order to ensure a “smooth landing” as the new properties transition from construction to operations, Kadans has launched a hunt for new skills and expertise. At the end of April, the firm hired Mark Hanna, previously a property boss at Bruntwood, to manage Kadans’ UK assets. The move came amid ever-increasing pressures on operational teams with the advancement of on-site technologies such as smart buildings and building management systems, as well as the specialities associated with science buildings like the management of gasses, waste management and adhering with government regulations.
“Once the keys are handed over, it’s the property management and operational teams who actually deliver the proposition to occupiers,” says Hanna. “Unlike traditional office blocks, there will often not be out-of-hours [operations]. Some of our labs can, do and will operate around the clock, so a key focus area for me is to ensure operational requirements are understood and met.”
Two more mid-senior-level appointments are expected to follow later this year, taking the team to a total of 16.
Hanna adds: “My team is the golden thread that runs through a whole building’s life cycle – from design through to major refurbishments years into a building’s life.
“Given the absolute need for accuracy when developing these special assets, you need that feedback from those on the ground who currently run, manage and deliver science in the existing properties. This is where our links to colleagues in the Netherlands becomes so important; they have been doing this for decades already.”
Learnt in the Netherlands and tested in King’s Cross – now the Kadans team has a new proving ground in east London on which it has made a bet.
To send feedback, e-mail evelina.grecenko@eg.co.uk or tweet @Gre_Eve or @EGPropertyNews
