With an ageing population, increasingly sedentary modern lifestyles, an expanding middle-class and the growth in influence of environmental, social and corporate governance factors all driving scientific innovation and discovery, there is a pervading will across private and public sectors to support the growth and diversification of life sciences.
On the public side, a £20m life sciences manufacturing fund was launched in April by the government, on top of a longer-term commitment to expand the national research and development budget to reach 2.4% of GDP by 2027. Last month also saw the formation of a new ministerial council and Office for Science and Technology Strategy with the aim of cementing the UK’s position as a ‘science superpower’.
Private funding also continues to aggressively target the sector for growth opportunities. A record £20bn was invested into UK life sciences companies last year – with another £10.6bn raised in Q1 2021, according to Savills analysis of PitchBook data. This points to a section of the domestic economy that will need physical infrastructure to be provided as part of its necessary expansion.
It sounds like a simple win for the commercial real estate industry: build laboratories and watch the money roll in. As with many sub-sections of real estate, however, the practicalities are not always that simple. Scientists can have a strange relationship with real estate – especially characterised by the much shorter lead-in times for space requirements compared with other sectors.
Requirements for laboratories are often generated remarkably quickly off the back of research or funding breakthroughs. This is true of almost all life sciences company types, ranging from university spin-outs to the more established pharmaceutical and medtech organisations (albeit on slightly different scales).
Quantifying demand
As such, specific demand in square footage terms for new laboratory space is very difficult to accurately quantify.
With the associated complexities and hefty capital expenditure associated with the provision of laboratory space, the lack of reliable market data may have contributed to commercial developers turning away from the sector historically – and particularly during periods in which those core sectors performed strongly.
Therefore, a foray into the life sciences sector via either development or acquisition would represent an an entirely new challenge for a large chunk of the industry, not only in terms of how best to curate the space for what is a broad spectrum of business types, but also in trying to identify which geographies are best placed to support industry expansion.
When we consider the present shape of life sciences domestically, the “golden triangle” of Cambridge, Oxford and London dominates when it comes to both inward investment from a venture capital perspective and existing corporate locations of major pharmaceutical and medtech businesses. This projects the appearance of an expensive and exclusive geographical monopoly.
The purpose of this research is to highlight that there is a growing number of alternative areas across the country and outside of that heartland that have the potential to become significant life sciences locations in their own right. This could enable the UK to rival Germany and the US in developing a truly polycentric life sciences industry that can better reflect the world-class nature of our scientific output. It would also bolster the government’s “levelling up” agenda outside of London and the South East if significant new branches of this burgeoning industry can be successfully grown.
Here we have identified locations that already have the physical infrastructure in the form of acdemic institutions, government organisations and industry to support the development and localised growth of a life sciences ecosystem. Areas with universities that have a strong global reputation for teaching life sciences according to 2021 Times Higher Education rankings will be key. At government level, teaching hospitals, key scientific institutions and Catapult centres, which are purpose-built research communities seeking to accelerate individual strands of scientific and technological discovery will provide a burgeoning sector with a springboard for growth.
Key infrastructure in the private sector includes the current locations of prominent life sciences companies, UK Science Park Association members and areas where fundraising has come in over the last five years to support enterprise. Unsurprisingly, those aspects in particular are heavily weighted towards the golden triangle – whether on more remote science parks or in close proximity to significant research institutes, teaching hospitals and university campuses within London, Cambridge and Oxford.
Undertaking this research has given additional clues as to what the natural next step in the geographical evolution of the life sciences industry might be in the UK – and the locations that newcomers to the sector should target while the opportunities are still relatively abundant and untapped.
Life sciences opportunity areas
West Norwich
This example might seem obvious given that if you travel from Oxford to Cambridge and keep going in a straight line, you come to the western edge of Norwich city centre. However, there are reasons for its inclusion here other than that it is the location to which an established sector would natually expand.
The University of East Anglia ranks in the top 100 global universities for studying life sciences, and is only a stone’s throw from some significant research institutes and a teaching hospital. Those anchor institutions have already created a partnership to deliver Norwich Research Park, which is home to more than 75 science and technology businesses and has adjacent development land available.
In transport terms, this might not be the best connected option from the list, but it does show up strongly on the metrics of existing infrastructure – and appears to be well on the way to becoming a significant branch of UK life sciences in its own right.
South Manchester
Geographically, this is a less obvious extension of the golden triangle than the western side of Norwich but, given the extent of supporting infrastructure across the southern edge of Manchester city centre, it does appear to be just as natural a location for the industry to develop.
Once again, an academic institution is at the heart of this cluster. Manchester university ranks 60th worldwide for teaching life sciences, and sits alongside teaching hospitals and a handful of UKSPA members to form a strong localised apparatus. It has the added benefit of being connected via the A34 to Bruntwood SciTech’s science and technology centre Alderley Park.
Manchester is likely to command a fair amount of attention from the government as it formalises its ‘levelling up’ prospectus, but the city has certainly already caught the eye of the private sector, being in the top 10 UK locations for life sciences venture capital since 2016, with nearby Altrincham also featuring in the top 20.
Northwest Leeds
The northwest quadrant of Leeds city centre plays host to Leeds university, which is ranked within the top 125 globally for teaching life sciences and sits only a short walk from the National Centre for Atmospheric Science and a couple of hospitals, serving to place the area among the highest scoring postcode districts for existing infrastructure.
Within the campus of Leeds university is the Connected Places Catapult centre – the branch that focuses more specifically on digital innovation. This marries neatly with the focus of Bruntwood SciTech’s Platform scheme which opened in 2017 to support the growth of Leeds’s technology sector with a different type of workspace provision.
That developing identity for the city combined with relatively strong existing infrastructure underlines the credentials of Leeds as a candidate for industry expansion – and this has clearly not gone unnoticed by investors, with Leeds placing 17th across the UK for venture capital investment over the last five years.
Birmingham North and Birmingham South
Birmingham is well-connected to the golden triangle on the southern side via the M40 – so, in a similar vein to Norwich, there are basic geographical credentials that support the city’s candidacy as a natural growth location for the UK’s life sciences industry.
Two neighbourhoods of Birmingham stand out most clearly when considering close-knit infrastructure provision, and the associated potential to incubate further industry and innovation.
The first is on the southern side of the city, anchored by the Edgbaston campus of the main university, which ranks in the top 125 globally for life sciences and sits in close proximity to Queen Elizabeth Hospital, Birmingham Women’s Hospital and Birmingham Research Park.
The other is closer to the city centre around the Gun Quarter, and is anchored by the location of the Energy Systems Catapult centre. It has Birmingham Children’s hospital close by as well as two universities and the Innovation Birmingham Campus.
Edinburgh
Scotland has several strong candidates that could be included in this list, with Glasgow, Aberdeen and Dundee all boasting high-performing universities for studying life sciences as well as reasonably strong supporting infrastructure.
However, Edinburgh university’s 28th-place ranking (the highest in the UK outside of the triangle) combined with the level of venture capital funding that has targeted the city in recent years puts the Scottish capital out on top when highlighting the next wave of growth locations.
The main university campus is not too far from either the International Centre for Mathematical Sciences or centrally located hospitals, which helps those central postcode districts to score well through our methodology – but there are common barriers to incoming investment shared between the golden triangle and central Edinburgh when it comes to land availability and pricing.
Extending the geographical scope slightly, we find a corridor towards the southeast of the city wherein Dalkeith Road (A7) connects the university to a major acute teaching hospital in Edinburgh Royal Infirmary, which itself sits adjacent to one of the most significant scientific research hubs in the country in Edinburgh BioQuarter.
Additionally, there is the potential of sites further afield in proximity to the Roslin Biocentre and Edinburgh Technopole, not to mention the cluster of major global pharmaceutical and medtech firms that have sites near the St John’s Teaching Hospital in Livingston. So, although the centre of Edinburgh could be a challenge when it comes to site procurement, there is a multifaceted nature to the city’s life sciences ecosystem that can offer a multitude of opportunities.
North and east Bristol
Two teaching hospitals and a strong life sciences university campus are the drivers of Bristol’s inclusion in this list – with all three essentially neighbouring each other on the northern edge of the city centre. This has formed the nucleus of a developing ecosystem across the Bristol city area, which has proved exciting enough to attract the most venture capital outside of the golden triangle over the last five years.
Around half an hour’s walk southeast towards Temple Meads is where you would find SetSquared and Unit DX – the two science park association members in Bristol city centre. In a similar vein to Edinburgh, Bristol has some supplementary pockets of infrastructure once you expand the criteria slightly and look at clusters of critical life sciences ecosystem components which connect to the city centre relatively well.
At Emersons Green sits the High Value Manufacturing Catapult centre in close proximity to Bristol & Bath Science Park, and over on the other side of the M32 is the University of the West of England campus, which houses the Future Space innovation community.
Newcastle, Gateshead and
wider North East
The postcode-sector methodology has been stretched here, but both Newcastle and the wider North East have the potential to become significant new branches of the UK life sciences ecosystem.
Gateshead hosts a Digital Catapult Centre and the Baltic Quarter, and across the Tyne in central Newcastle is the National Innovation Centre for Ageing, a teaching hospital, the Policy, Ethics and Life Sciences research centre, and a top-125 ranked university for life sciences in Newcastle university all in close proximity to each other.
Newcastle can also boast the sixth-highest amount of venture capital investment for UK locations since 2016 as its life sciences credentials continue to build. Beyond this, further Catapult centres are located in Darlington, Redcar, Sedgefield, and Sunderland – with the latter also hosting a university campus and hospitals in relatively close proximity. Durham sits roughly in the middle of this expanded catchment with several hospitals and a high-reputation university – albeit without a strong global ranking for life sciences specifically.
The North East in general could be one to watch – with governmental departments preparing for a partial move to Darlington and the incumbent Conservative administration keen to solidify recent electoral gains in the region, it is likely to be a particular area of focus when it comes to specifics around the levelling up agenda.
Opportunities abound
While UK life sciences might seem to some observers like an expensive closed shop operating exclusively in three of the most expensive locations in the country when it comes to real estate, that isn’t necessarily the whole picture.
Academic excellence, burgeoning industry presence supported by funding and the requisite governmental infrastructure can furnish a swathe of regional cities with the potential to play host to the expansion of the domestic life sciences industry.
The UK government will already be looking at these key cities and how they can drive localised growth as part of the levelling up agenda but will it look to the life sciences sector to play a role in that? Or could it be the case that, because the golden triangle currently dominates the industry, a question mark still hangs over whether other locations are well-equipped enough to facilitate further growth in the sector?
Ironically, there isn’t an exact science to pinpointing which among the areas highlighted here will be optimal for real estate players to target – but all of them might warrant closer inspection for those keen to enter or expand their interest in the sector but are as yet put off by the characteristics of the ‘heartland’.
To send feedback, e-mail graham.shone@eg.co.uk or tweet @GShoneEG or @EGPropertyNews/a>
