The UK has recently witnessed record levels of investment and funding in the science and technology sector which, as a result, has generated an increased demand for life science labs, innovation centres and research parks. In this insightful Q&A session, Pexhurst Director Nick Tagliarini engages in a dynamic conversation with Bidwells Partner Jonathan Wright, exploring the intricacies within the science and technology sector.
1. How critical has it become for contractors to be able to fast-track the delivery of laboratories and science parks?
In the fast-paced world of commercial settings, speed to market has always been a crucial factor, especially when catering to the occupational needs of tenants. This consideration becomes even more significant for science & tech occupiers, where specific functions within the new spaces are essential for successful operations. Take, for instance, a current user with a biology lab function but lacking chemistry labs. The addition of chemistry labs is vital for them to pursue a specific project focus. Any delays in achieving this can pose challenges in meeting funding milestones and getting that particular project to market.
2. What are the key design considerations when constructing state-of-the-art science and technology laboratories to ensure optimal functionality, safety, and research capabilities?
When contemplating specialist fit-outs, a crucial factor is a comprehensive understanding of the building’s capabilities and limitations. Lab spaces, in particular, differ significantly from offices and industrial spaces, demanding superior structural and vibration capacity, advanced drainage systems, enhanced ventilation, and increased power provisions. These specific requirements present unique challenges, especially when dealing with spaces not originally designed with these considerations in mind.
3. How do well-designed buildings in the science and technology sector foster chance encounters that encourage idea-sharing and promote health and wellbeing?
Over the last five years, there’s been a noticeable shift towards fostering collaboration and sharing within the life science industry. Traditionally, in Science Parks, each building operated in relative isolation, shielded from its neighbours. However, there’s now a trend towards opening up these parks to a diverse range of users and the surrounding community. The aim is to cultivate an environment where individuals and companies can exchange ideas and share information, this is particularly prevalent for the convergence of science and technology companies. This evolution places a greater emphasis on placemaking and the provision of shared amenities than we might have observed in the past.
4. What are some of the drivers for sustainability within the science and technology sector?
The operational demands of buildings, driven by equipment loads and the corresponding building services, often result in increased energy consumption. Environmental, Social, and Governance (ESG) considerations have become a pivotal concern for asset managers and institutions. Notably, larger occupiers are now actively seeking to enhance their ESG credentials. While traditional standards for occupational energy usage and carbon footprint remain crucial, there’s a growing focus on emerging standards like LEAF (Laboratory Efficiency Assessment Framework). In this landscape, we are actively supporting occupiers in navigating and adopting these evolving sustainability benchmarks.
5. What impact has the UK planning system had on future developments?
The government have outlined their support for R&D infrastructure over the past year in various statements from Jeremy Hunt and Michael Gove. Planning system reform arguably holds the key to dealing with infrastructure constraints for the science and technology sector, mainly in the development of additional office and laboratory space. The Levelling Up and Regeneration Act (LURA) and National Planning Policy Framework (NPPF) are key for seeing out planning policy and encouraging development not only across the Oxford-Cambridge Arc but nationwide. Read more from my planning colleagues here.
6. How has economic uncertainty impacted funding and investment in the science and technology sector?
As detailed in our Arc Investment Report, the Arc has been steadily growing—outpacing the UK economy by 0.7% per annum over the last five years. This upward trajectory looks set to continue in the next five years, thanks to the renowned universities and strengths in Life Sciences, Technology, and Advanced Manufacturing that define the region.
Now, let’s dive into the real estate scene. Much like the broader UK market, the Oxford-Cambridge Arc felt the effects of a notable increase in interest rates over the past 18 months. Investment activity has dropped from the peaks of 2021-22. My prediction is that the first half of 2024 will most likely see a recovery in liquidity and a stabilisation in prices.
7. What level of government support is there for this ‘superpower’ sector?
In Jeremy Hunt’s Mansion House address last July and Michael Gove’s commitment to position Cambridge as Europe’s ‘Science Capital,’ it’s clear that the government is not just endorsing the science and tech sector but also championing the clusters emerging across the Oxford-Cambridge Arc.
During our Scientific Superpower Conference, Chloe Smith, who served as the Secretary of State for Science, Innovation, and Technology at the time, shared insights on the collaborative efforts between the government, businesses, investors, and academia. Her speech highlighted a concerted drive to foster innovation across the UK.
8. Over the last 12 months, what are tenants now demanding as standard in the space they are taking?
The persistent demand for laboratory space consistently outpaces the available supply, (Bidwells Arc Market Databooks). Consequently, any available space tends to garner robust interest. Since 2020, the landscape has shifted, with many science and tech occupiers now having access to substantial funding. This shift has redirected the focus from the cost of adapting the space to considerations centred around location and the potential for business expansion.
9. How does the future look for the science and tech sector in the next five years, both in Cambridge/Oxford and across the rest of the country?
Over the next five years, the UK is set to receive ongoing government support and substantial investment in the science and technology sector. Spearheaded by Life Sciences, the nation’s ambitious journey to attain scientific superpower status is creating significant opportunities for real estate investors and developers. Delving into the intricacies of the sector, our comprehensive Life Sciences 2030 research report series unveils how the integration of AI, robotics, and specialised manufacturing will revolutionise real estate needs in the years to come, guiding the trajectory of real estate development and investment.
In 2021, Life Sciences made a remarkable £89 billion contribution to the UK economy and played a pivotal role in generating nearly 270,000 jobs. While the industry’s footprint spans diverse geographic locations, there is a discernible concentration of research and development activities around leading academic institutions and areas of specialised expertise.
Follow us on LinkedIn – https://www.linkedin.com/company/pexhurst-services-limited/
