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Space the only constraint to the growth of Life Sciences

Space is the only constraint to the continued growth of the Life Sciences sector, delegates heard at Real Asset Media’s Investing in Health Tech and Precision Medicine briefing, which took place online yesterday on the REALX.Global platform.

“A common theme is the difficulty companies have to find the space they need because they grow very fast,” said Harper VanSteenhouse, president, BioClavid.

Harper VanSteenhouse.

The pandemic has put the spotlight on a sector that was already attracting interest before Covid-19, leading to a flurry of activity.

“We have a weight of money coming into the sector and it’s growing fast,” said Emma Goodford, partner, department head, national offices, Knight Frank. “The number of life sciences registrations more than doubled to 1,000 last year and job vacancies increased by 58%, showing the voracious appetite for talent in the sector.”

The boom in the life sciences sector is not comparable to the dotcom bubble, she said, because it has been an acceleration of an existing sector rather than something that came out of nowhere.

The growth has been rapid but it is set to continue, driven by a strong underlying demand.

“Growth was accelerated by Covid but it would have happened anyway,” said Marian McNeil, CEO Precision Medicine, Scotland Innovation Centre.

Businesses in the life sciences sector are growing fast and are hungry for space. As a short term solution there is likely to be a lot of repurposing of existing buildings, but medium and long-term solutions are needed.

Emma Goodford, Partner, Department Head, National Offices, Knight Frank

The challenge for the real estate sector is not just finding enough space to accommodate them, but also creating the right kind of space and environment.

“There is a saying that life sciences don’t do real estate, they build communities,” said Goodford. “The role of place is very important. The successful places are the ones that will deliver the best results for the businesses based there, from start-ups all the way to established players.”

There is likely to be a continuation of the trend for specialist locations that are able to create a niche and foster an ecosystem. But some prime locations, like the Cambridge-Oxford-London “golden triangle” which has one of the world’s leading concentrations of biotechnology and life sciences, are becoming very expensive.

“There was a recent transaction at £24 million an acre in Oxford, which is ten times the price that would have been paid two years ago before the pandemic,” said Goodford. “Inflation is a great concern for investors and for the occupier market.”

The solution is to find other locations and direct investment to areas outside the South-East of England. The UK Government is encouraging this with its Levelling-Up agenda, which seeks to direct more funds to regions of the North.

“Already 50% of the workforce in the life sciences sector is employed outside of London and the South-East,” said Goodford. A sign that the shift northwards is already happening, helped by the availability of skilled labour at all levels, from young graduates to experienced professionals.

An example is BioClavid, a Californian personalised diagnostics company that chose to set up base in Scotland four years ago.

“Glasgow has been a great landing spot for us,” said VanSteenhouse. “It is easy to grow a business and it is easier to hire people here than in America. We started hiring four and now we are up to 40 and still growing.”