British Land and Savills have sent the prime minister a five-point plan to give a £4bn boost to life sciences real estate.
The Accelerating Innovation report makes a series of recommendations designed to accelerate the delivery of life sciences growth across the UK, which is one of Rishi Sunak’s top economic priorities.
British Land chief executive Simon Carter said: “There should be no limit to the ambitions of the UK life sciences sector. We have the academic strength, a skilled workforce and cutting-edge clusters.”
However, he said the planning system and inadequate investment in infrastructure were limiting those ambitions.
“In order for the UK to become a life sciences world leader, we need to quickly increase the supply of life sciences real estate with the right specifications in the right places,” he said. “The potential is huge and we are ready to play our part to grasp the opportunity.”
The report points to the “severe shortage of real estate space to accommodate both current and predicted demand”, noting that vacancy rates for fitted laboratory space are just 1% in Cambridge and London and 7% in Oxford.
Tom Mellows, head of Savills Science, said: “We are continuing to see positive levels of demand across the golden triangle, particularly in Oxford and Cambridge, where take-up remains at record highs. However, the UK will not be able to sustain this level of growth if we don’t provide the right real estate.”
He added that, if the life sciences markets in the Golden Triangle were able to match the growth seen in leading markets in the US, it would generate an additional £4bn GVA by 2035, and an extra £1.1bn per year in tax revenue.
Accelerating the growth of R&D facilities outside the Golden Triangle would result £870m per year in additional GVA and an extra £235m per year in tax revenue.
British Land and Savills have set out five recommendations, urging the prime minister to:
- Set ambitious growth targets for the sector, including growing GVA by at least 25% and doubling the value of inward foreign direct investment by 2035.
- Prioritise infrastructure to support the growth of clusters, including a commitment to build the East West Rail line.
- Enable planning delivery by designating development corporations to support innovation-led regeneration in economic growth corridors.
- Use the tax system to support life sciences real estate growth by expanding R&D tax credits to include relief for capital expenditure on laboratory space, drawing on international examples to boost the sector.
- Align local skills with opportunities in life sciences to deliver inclusive growth.
Mellows said: “London is a great example of where the lack of purpose-built lab space has impacted on occupiers’ ability to expand. However, 2023/24 will see the first delivery of a significant quantum of this type of space in the capital, which will no doubt lead to an uptick in activity moving forward. We have already seen demand for science related real estate increase considerably over the past five years and the potential to deliver growth quickly will accelerate this further still.”
British Land has been increasingly pivoting to lab space, with plans for 1.9m sq ft expected to be delivered across its existing portfolio, including 200,000 sq ft by the end of the financial year.
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