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Blog: Life sciences real estate investment – a lifeline for London’s property market

Our International Director, Phil Jackson, reflects on the positive picture we’ve seen recently for life sciences real estate, in particular the emerging cluster in King’s Cross, and how we got here.

The COVID-19 pandemic continues to present the most challenging of times for us all. The human cost so far has been significant, including, sadly, that of frontline healthcare workers. And now we face rising case numbers, with all the concerns for our healthcare system that brings. Economically, the pandemic has undoubtedly hit many businesses, indeed whole swathes of our economy, hard. And, as we settle into a semi-lockdown, with office workers again being told to work from home for the foreseeable future, the London commercial property market is one industry whose future looks particularly bleak.

There remain reasons to be positive however, reasons that those of us in life sciences can feel proud to be part of. Much as there may be differences of opinion in the best way to tackle the pandemic, most are unanimous that the answer lies in a breakthrough that will come from life sciences. And the work being done in treatments, vaccines, testing and more is nothing short of phenomenal.

Beyond the science itself, confidence in life sciences developments in London and the South East of England remains. With the spotlight on, and recognition of the crucial role our sector can play, life sciences real estate appears to be bucking the trend of other parts of the economy.

Earlier this month we saw GSK announce the opening of a £10 million research base in King’s Cross. Using artificial intelligence (AI) to find new treatments for cancer and other serious diseases, the centre will house 30 scientists and engineers. King’s Cross was chosen as the obvious candidate, with the ease of collaboration with AI researchers at Google’s DeepMind and the Alan Turing Institute, as well as with life sciences researchers at the Francis Crick Institute.

This comes following the pharmaceuticals multi-national MSD unveiling plans for a £1 billion research hub, also in King’s Cross. The plans for a 10-storey, 220,000ft2 ‘London Discovery Research Centre’ include employing 800 clinical researchers and office staff.

MSD’s planned London Discovery Research Centre
MSD’s planned London Discovery Research Centre – illustrative view looking from King’s Cross Square. Image credit: AHMM architects /

Was the outlook always so positive?

Five years ago, international reports comparing biotech clusters across Europe highlighted the single largest weakness of the London life science sector as the lack of life sciences space (that is, laboratory and innovation space). Longstanding bioincubators such as London Bioscience Innovation Centre (LBIC), Queen Mary Bioincubator and Imperial Incubator were entirely full, with extensive waiting lists. The message being sent by London to the world was “our science is excellent, but we have nowhere for you to work”.

It cannot be understated just how constrained and stagnant the lack of space had left the life sciences sector. The factors behind this were three-fold:

  • absence of available land in proximity to major research hubs such as UCL
  • the easy profits per square foot of new office construction in central London. Offices allowed more floors of office than the equivalent of laboratories, and the latter incurred a 20 -25% construction cost premium
  • a weak life science capital market and existing academic models that had been highly grant dependent.

The beginnings of change

We’re proud that MedCity has  played an important role in creating an overall shift away from this model. From the very outset we’ve had a relentless focus on growing life science space as a key to achieving our core goal to support the growth of the sector and in turn, the economy, in London. We began by more comprehensively documenting the unmet demand across London for lab space – an approach that concluded with a year-long study (based on national and international interviews of SMEs and multinationals). This study – Planning for Growth – Demand for Healthcare R&D Space in London – released in late 2016 with Creative Places, documented objectively a gap of a minimum 200,000ft2, excluding multinationals and excluding Imperial White City.

Not only did the MedCity report document the space gap, it explained where in London the gaps were most acute, and what the factors were in shaping company location. This report had a catalytic effect on the property sector, as increasingly more domestic and sophisticated overseas lab developers began to sense opportunities in London. In effect, the report served as a guide to developers and property agents to focus the mind on the prospects for profitable growth by building laboratories in central London.

Emerging London clusters

The most startling transformations we have seen so far have been White City and King’s Cross.

Imperial College deserve much credit for being at the forefront of breaking down the old, stagnant, model and taking a brave risk-taking approach to building a major new 25-acre science campus on an ex-industrial site in White City in 2016. Driven by the space limitations and legal covenants that severely constrained life sciences growth at the South Kensington campus, the university drew on Imperial capital among developer funding in a bold attempt to address the issue.

In King’s Cross, the Francis Crick Institute, a world-class centre for basic science, had been built and commercial pharma and others were desperate to work in proximity – but no space for commercial was built at The Crick. From here, the story of the British Library Project evolves. Again, we at MedCity are proud to have been at the heart of many of the multiple meetings and conversations that have seen an original idea for basic office blocks transform into one of the largest planned life science developments in all of Europe – a visionary 800,000ft2 centre for science and innovation.

To their immense credit, UK developer Stanhope and Japanese developer Mitsui Fudosan, evolved designs for the British Library to respond to life science and related demands. The result has been a bold, confident project that stands as an important mark of confidence in UK life science. As such, demand to engage with the development was significant from the outset and even at the planning stages, companies from multinationals to SMEs were scrambling to have rights to parts of the building.

This brings us back to the MSD announcement this year. With MSD desperately seeking space for its London Discovery Research Centre in or near the British Library, we made an early tip to consider an unlikely location candidate – a former access storage building across the road from King’s Cross station. MSD went on to consider a number of locations, but came back to our original wild card suggestion. Within seven minutes’ walk of The Crick, and yards from one of London’s busiest stations, it will build on what is now a formidable life sciences cluster in-the-making in London’s Knowledge Quarter.

Francis Crick Institute

MedCity’s continuing role

We remain hugely committed to capitalising on the growth we’ve seen so far, and continuing to help develop these clusters of life sciences space. As I write, we’re involved with at least three other major life science developments to the south and east of King’s Cross, and my writing has been interrupted by a German financier seeking to invest in a building near Kings Cross, by another company seeking to develop space at the old Camden Town Hall and a further developing three buildings adjacent LBIC.

Often the work that we do in the area of life science real estate is far from obvious. At its simplest, it is articulating the possibilities of aligning interests between developers, communities, academia and the life science industry. At its most profound, it is supporting and assisting massive change, job growth and building that supports a vibrant, forward-looking life science future for London. Multiple players and decisions are involved in this of course, and, ultimately, those brave and bold decisions must be made by the developers, companies and institutions involved. The transformations, though, are immense in jobs, funding and renewal, and we are very proud to continue to play our role in catalysing this.

Watch this space for more developments coming soon!

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