Some 56% of the Golden Triangle’s 30m sq ft life sciences development pipeline is still in the pre-planning phase, according to Knight Frank, which risks compounding the region’s existing 1.9m sq ft shortfall.
Researchers at Knight Frank said planning barriers and lack of access to critical infrastructure are inhibiting developers’ ability to deliver new space in the Golden Triangle – the area comprising Cambridge, Oxford and London.
The news comes as lab and life sciences take-up fell by 23% year-on-year to around 150,000 sq ft during Q3.
The figure is also down on Q2’s take-up level of 315,000 sq ft, which was buoyed by Moderna’s 145,000 sq ft deal at Harwell Campus and the strongest quarter for leasing activity in the past five years.
However, Knight Frank said nationwide demand for space is set to speed up in the coming years, with 277 new life sciences companies incorporated in Q3, up 9% from the previous quarter and 31% higher than the same period in 2022.
So far this year, 813 life sciences companies have launched in the UK, the highest number for the first three quarters of any year in the past decade.
It was also a strong quarter for venture capital funding for life sciences, in which £883m was raised (5% up from Q3 2022), taking the total raised by the sector in 2023 to over £2.7bn.
The researchers said this was the second-highest level over the first three quarters of the year in the past decade.
Knight Frank said supply of new space to accommodate that growth remains constrained. In Cambridge, there is more than 1m sq ft of lab demand, compared with 24,700 sq ft of available space.
Region-wide, circa 2.3m sq ft of live requirements contrast with just 417,000 sq ft of available space.
Conversely, while new company formations are up, insolvencies in the sector have climbed at the same time. So far in 2023, 818 companies in the sector have gone into liquidation, representing a 14% increase from 716 insolvencies in the same period last year. This is also significantly higher than 679 insolvencies five years ago.
Knight Frank partner and head of life sciences and innovation Emma Goodford said: “Demand for high-quality life sciences space across key markets in the Golden Triangle continues to rise in tandem with the emergence of new AI and digital health technologies.
“The lack of suitable supply, particularly in Cambridge, which attracted a significant proportion of Q3 venture capital investment into the sector, is hampering the growth ambitions of life sciences start-ups and driving significant rental growth across the region.”
Knight Frank partner Jennifer Townsend added: “For the Golden Triangle to retain its position as Europe’s pre-eminent life sciences market, urgent action is needed to promote increased development and remove the barriers to the delivery of new space.
“The potential of the sector to deliver a significant boost to the UK economy and create high-value jobs otherwise risks being stymied by the difficulties facing developers who seek to create dynamic and high-quality innovation clusters.”
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