The pharmaceutical and life sciences sector has accounted for the highest proportion of take-up in the M25 corridor over the past five years, according to Savills.
In the Thames Valley, the pharmaceutical sector accounted for as much as 30% of take-up in 2016 – the highest proportion on record since 2000. The region also has the highest concentration of life science employees and companies in the UK.
Strong take-up has continued this year with 64,162 sq ft acquired by the pharmaceutical sector in Q1, accounting for as much as 9% of space transacted in the South East.
Savills data revealed that the average pharmaceutical deal size since 2010 was 23,539 sq ft, which is 47% larger than the market average of 15,950 sq ft.
Notable deals in the sector last year include Bayer taking 80,000 sq ft at Green Park in Reading, Smith & Nephew leasing 60,000 sq ft at Croxley Green Business Park in Watford and Becton Dickinson taking 44,557 sq ft at Winnersh Triangle in Reading.
Deals involving K2M at Stockley Park in Uxbridge, Pierre Fabre in Reading and Mallinckrodt Pharmaceuticals in Staines all achieved record rents in their respective markets at the time of signing.
After last year’s EU referendum, 60% of deals completed, 13 of which were international firms cementing their presence within the UK.
The research shows that US-based occupiers accounted for 685,563 sq ft of take-up, equating to a 41% market share, over the same period. Notable US deals in the South East since 2011 include Gilead Science, Abbott Laboratories, Covance and Becton Dickinson.
Simon Preece, associate in Commercial Research at Savills, says: “The pharmaceutical sector in the South East received £519.7m of investment last year, following on from £1.5bn in 2015, proving that there is still strong demand from investors.
“The extra capital invested bodes well for future job creation, which in turn will lead to further real estate transactions. Furthermore, with the demographic of the UK shifting towards an ageing population, this is likely to continue to drive research into drug development and life sciences products.”
Savills predicts the growing importance of pharma-tech clusters as collaboration between pharmaceutical companies and big data analytic providers increases.
Jon Gardiner, head of national offices at Savills, adds: “The UK’s decision to leave the EU has resulted in uncertainty surrounding future R&D funding, and while funding clearly remains paramount, these types of occupiers also need access to highly skilled workers from the life sciences and knowledge economy, and the Thames Valley is exceptionally well placed to deliver in this respect.”
To send feedback, e-mail Shekha.Vyas@egi.co.uk or tweet @shekhaV or @estatesgazette
