COMMENT A lot has been said about the growth of the UK’s life science sector in the past 18 months. London in particular, while a relatively immature market when compared with Oxford and Cambridge, is seeing considerable demand that shows no signs of slowing.
This is largely being driven by an increase in venture capital investment. In the first half of 2021 this totalled £853m, a jump of 228% when compared with the £260m recorded for the first half of 2020, which was no doubt accelerated by the pandemic. However, when looking at more “normal” times, the first half of this year was still 95% higher than the same period in 2019, at £438m.
In London alone, as of the end of September the total VC raised by life science companies headquartered in the capital amounted to £720m, which is already 115% higher than 2020. However, there still remains a critical lack of suitable space.
It has already been proven that there is a direct link between a company raising capital and their subsequent real estate needs. Meaning it is essential that we see the growth of both existing clusters and the emergence of new hotspots across London.
Existing hotspots
One of the most well-known London life science hotspots is King’s Cross. Home to global pharmaceutical giants including AstraZeneca, as well as world-renowned research centres such as the Francis Crick Institute, this is often top of the wish-list for life science occupiers.
A number of notable deals have taken place there in the past 18 months, including Gyroscope Therapeutics, the retinal gene therapy company, taking 27,000 sq ft at Rolling Stock Yard and MSD taking 220,000 sq ft for a new drug discovery centre. Yet, given its popularity as a commercial location, it is difficult to find space even for conventional occupiers. What’s more, there remains a considerable lack of lab-enabled stock, which has forced life science firms to find viable alternatives.
White City is another key existing hotspot, largely due to its close proximity to Imperial College London. At present it also has significantly more availability than King’s Cross, as well as a considerable development pipeline, which is either directly targeted at life science companies or already lab-enabled.
The majority of buildings are owned by a small number of landlords, namely Imperial College, AIMCo, Mitsui Fudosan and Cadillac Fairview, with Stanhope as development and asset manager. The schemes include White City Place, Television Centre and Imperial College’s major new White City Campus. This has enabled a more cohesive approach to supporting expanding life science firms. For example, Autolus Therapeutics, a biopharmaceutical company specialising in T cell therapies to treat cancer, was able to more than double the size of its research and development space from 15,000 sq ft to 32,000 sq ft in White City Place’s MediaWorks building.
Emerging hotspots
Given the increasing demand for space, new locations are now being considered. This is due to a growing recognition by health and academic institutions of both the public and commercial value opportunity in the sector. Whitechapel, which is home to Royal London Hospital, already has a masterplan proposal for a circa 1m sq ft life science-led scheme. Owned by the Department of Health and Social Care, and in conjunction with Barts Life Sciences, the vision is to create a new life science cluster to support the expansion of health, bio-tech and life science research.
South of the river, from Vauxhall through Waterloo all the way to London Bridge, is also being touted as an up and coming location. In reality, there is already significant activity happening here. As a result, the SC1 initiative has recently been set up to support inclusive growth of the health science economy in the area. The location’s proximity to King’s College London and Guy’s and St Thomas’ Hospitals, as well as excellent transport links and amenities is key to the number of active requirements from life science firms.
The supply pipeline is looking to capitalise on this growing demand. For example, Stanhope and Baupost are planning the development of a 5.5-acre site at Royal Street, opposite St Thomas’ Hospital, which will look to cater to life science and medtech companies.
Future potential
Looking ahead, there are a number of places across London that have good future potential to attract life science occupiers. Namely, Paddington, around St Mary’s Hospital, Stratford, which is soon to be home to the new UCL East campus, British Land’s Canada Water, which has a 4m sq ft commercial development pipeline, and Canary Wharf.
Ultimately, London has the right formula to help cater to growing demand from life science occupiers and by providing the best space in the right place we can find a cure to the current shortage of supply.
Tom Mellows is director of UK science markets at Savills
