Life sciences real estate: keeping pace with the science

I attended Bisnow’s UK Science & Technology Real Estate Annual Conference this week. Plenty of insightful comments were made, but the point I kept coming back to was how differently science and property move.

Six months can be a long time for a science, tech or innovation business. In contrast, designing a building, getting planning permission and delivering it can take several years. By the time the real estate is ready, the science business requiring it originally may have moved on with its requirements. Naturally, that has some fairly practical implications for what life science real estate is built and how it is let.

There were encouraging comments about the venture capital and funding environment, including a recovery in the NASDAQ BioTech Index and significant M&A activity. However, the picture is more selective than a general recovery across the sector - much of the venture capital has gone to larger, more established businesses, particularly in AI. That does not necessarily translate into immediate additional demand for lab space. As someone put it, there is no longer a rising tide to lift all boats.

With some of the lab space delivered following COVID potentially needing adaptation, most panelists were clear in that property fundamentals require the closest look. Being a life sciences building in the Golden Triangle is not enough on its own - building quality within a wider ecosystem and the ability to support occupiers as they grow all matter.

Flexibility came up throughout the day, both in design and leasing. One panelist put it exquisitely simply: if he is talking to a science or tech business needing 5,000 sq ft today, that same business considers their requirement in 5 years time as possibly needing 50,000 sq ft or no space at all - it's exponential growth or non-existence. Committing to a 15-year lease is difficult against that background. Those businesses want to move quickly into space when they have a requirement, while also wanting a clear and secure route to grow within the same ecosystem. Expansion options are therefore as common as break rights. For landlords, knowing the occupier and understanding its plans seems just as important as having an adaptable building.

AI and automation add another layer to this. The discussions pointed to greater demand for dry labs and computing space, more interdisciplinary laboratories (combining chemistry, biology and engineering), and growing use of autonomous (or dark) labs. I was also struck by how much of the discussion was about what happens around the lab. Access to shared facilities, financial training, funding exposure and university or clinical partnerships can make a real difference to a business trying to grow. Providing an excellent lab is therefore only one part of that.

For me, the most useful point was that flexibility needs to be worked through early. It affects the building, the lease and the ability to accommodate an occupier’s next stage of growth. Staying close to those occupiers gives owners a better chance of making the right decisions as their needs change.

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