Challenging economic conditions have been hurting life sciences-related investment activity across the Golden Triangle markets so far this year, according to Savills.
The consultancy recorded £320m of assets traded or under offer in the first six months of 2023, down on last year’s H1 total of £850m.
As at the end of the period, Savills had tracked £700m of life sciences-related stock being marketed, which it expects to translate into transactions in the second half of the year.
Turning to leasing, take-up of life sciences-related real estate across London, Oxford and Cambridge totalled 674,000 sq ft in H1 2023, a 16% decrease on the 800,000 sq ft recorded a year ago. As much as 396,000 sq ft of the total transacted across the region was for laboratory space alone.
The largest deal in H1 2023 saw Moderna preletting 145,000 sq ft at Harwell Campus in Oxfordshire, while last year’s figures were boosted by a 195,000 sq ft prelet to MSD at Belgrove House in King’s Cross.
Other notable deals so far this year included Ryze Hydrogen acquiring 23,000 sq ft of space at North Bailey House in Oxford and MSD preletting a further 12,000 sq ft in King’s Cross at Sky Lab at the Francis Crick Institute. According to market sources, the latter deal saw the price per sq ft skyrocketing to more than £500.
At present, there is 449,000 sq ft of science-related space under offer within the Golden Triangle.
The value of venture capital raised in the life sciences sector by companies headquartered in the Golden Triangle amounted to £966m as of the end of June, 28% lower than the level recorded in the first half of last year. Savills has calculated that venture capital raised in the first half of 2023 remains higher than in H1 for any year prior to 2021, which is set to support further occupier demand in both the short and medium term.
Tom Mellows, head of UK science at Savills, said: “Undoubtedly, the more challenging funding market will lead to difficult decisions for some, but this should ultimately see interesting trends emerge, including greater collaboration between big pharma and start-up firms.”
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