Welcome to Carter Jonas’s Life Science Report H2 2022, our biannual update on the outlook for the life sciences sector across the UK and in the key markets of Oxford and Cambridge
Oxford Overview
Cambridge Overview
Regional Map
UK Overview
What sectors make up the life science industry?
What is a science park and what is the scale of the market?
Core Biopharma – involved in developing and/or producing their own pharmaceutical products. Biopharma Service and Supply Chain – offering goods and services to Core Biopharma businesses. Core Med Tech – developing and producing Med Tech products. Med Tech Service and Supply Chain – offering services to Core Med Tech businesses. Digital Health – making products for both hospitals and consumers. Genomics – an interdisciplinary field focusing on the study of the human genome and the application of resulting knowledge to human health. Artificial Intelligence Machine Learning Natural language processing
Science parks are locations that primarily house knowledge-intensive companies, supporting innovation and helping to foster growth. They achieve this through providing flexible accommodation with high-quality R&D facilities and enabling businesses to co-locate and collaborate with other firms in their sector. They are often, but not always, affiliated with a college, university, NHS or big pharma companies. Science parks can provide access to advice and business support, often through an associated university. The life sciences sector is most commonly associated with science parks, but they are home to a wide variety of tenants where technology and innovation are paramount. Indeed, there is a trend toward the convergence of the traditional life sciences and wider technology, due to advances in digital science, advanced materials and life science. A science park is therefore distinct from a more general business park, although in reality, there is a “grey area” between the two, and many business parks contain occupiers from the technology and research sectors, due to the lack of specialised space. Indeed, many business parks have been actively trying to attract occupiers from the science and technology sectors. The UK science park sector has grown rapidly, from only 2 parks in 1982 to around 160 today. Nearly 40% of locations in UK Science Park Association (UKSPA) membership have opened since 2010.
Other definitions: *Life science investment funding figures include companies in the following industries: Pharmaceutical, Biopharma, Genetics, Quantified Self, Biotechnology Health Diagnostics, Clinical Trials, Biometrics, Life Science, Bioinformatics, Neuroscience, Health Care, Artificial Intelligence, Medical Device, Nutraceutical **Life science employment consists of professions including Chemical scientists, Biological scientists and biochemists, Physical scientists, Natural and social science professionals, Research and development managers, Laboratory technicians, Science, engineering and production technicians n.e.c.
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Going into 2023, the sector appears to be in good health. Despite the challenges posed by the COVID-19 pandemic, the UK life science sector has continued to grow and innovate, with companies and institutions working together to develop new treatments and vaccines. With its world-class research institutions, supportive government initiatives, and strong industry presence, the UK life sciences industry has received a lot of attention and record levels of funding.
A direct result of the strong capital flowing into the industry is increased demand from life science occupiers. Businesses of all sizes, from start-ups to more established and mature companies, have increased their footprint, with the supply/demand imbalance putting upward pressure on rents.
Developers and new entrants to the market are bringing forward lab-ready buildings in response to the ongoing shortage and the demand within key regions. However, there is a time lag before it will hit the market, and only a small proportion of buildings within the development pipeline are set to break ground this year.
The regional markets will look on with interest as the first of the new life science developments are completed, providing the opportunity to build evidence for new rental levels and the resilience of market demand.
The government has put the sector high on its agenda and is working on new ways to incentivise it further. At the beginning of 2023, it announced the creation of the Department for Science, Innovation & Technology, proving the sector’s importance in the Government’s thinking.
Strong growth in the sector is likely to be supported by sustained government backing combined with private sector R&D spending. Although we expect the most advanced markets such as London, Cambridge and Oxford to accelerate faster, other established clusters like Manchester, Birmingham, Newcastle, Liverpool, and Leeds are also anticipated to draw both investors and occupiers.
only a small proportion of buildings within the development pipeline are set to break ground this year
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Businesses of all sizes have increased their footprint, with the supply/demand imbalance putting upward pressure on rents.
The UK life science industry comprises the following sectors:
Source: Crunchbase, Dealroom, Carter Jonas*
Since the onset of the pandemic, funding secured by businesses in the life sciences sector has reached levels not previously seen. Funding in life science companies in 2022 totalled $6 billion. Although that was below the $17.3 billion invested in 2021 it was the second-highest year on record.
In 2022, the golden triangle of Oxford, Cambridge and London accounted for 95% of total investment, with a combined $5.1bn. Notably, London accounted for $3.7bn of this amount.
Life sciences employment has performed better than the labour market as a whole over the past decade. UK total employment recorded growth of 1% per annum on average in the 10 years to 2021, while life sciences employment increased by 3.6% per annum on average in the same period. The pandemic further accelerated demand for talent in the sector with life sciences employment recording growth year on year of 13.4% and 8.5% in 2020 and 2021, respectively.
life sciences employment increased by 3.6% per annum on average in the 10 years to 2021
The Core Med Tech subsector accounts for nearly 45% of the total share of life science companies in the UK. The Biopharmaceutical Service and Supply sector accounts for 23.7%, followed by Med Tech Service and Supply and Core Biopharma, with 18.7% and 13.1% of the total, respectively.
Source: Department for Life Science
Source: Nomis, ONS, Carter Jonas**
Source: Office for Life Science
There remains a significant shortage of lab space with relatively few schemes bringing new product to market in the next 12 months. . We expect new developments in the core life science markets of Oxford, Cambridge and London to underpin the sector in 2023 with pre-let activity growing for the supply set to follow in 2024. A growing number of regional cities are advancing proposals, including Birmingham, Manchester, Liverpool and Newcastle, and are expected to continue strengthening the sector through 2023.
There are several schemes underway, including at Arc Harwell in Oxfordshire, Citylabs 4.0 in Manchester and Birmingham Health Innovation Campus, with more expected to start over the next two years.
Landsec has committed to plans for Cambridge Northern Fringe East, a £3 billion residential and life sciences campus development focused on a 120-acre site, while British Airways’ New Airways Pensions Scheme (NAPS), GIC and Reef Group have finalised their joint venture agreement to develop Tribeca King’s Cross, a £1bn+ life sciences development in London’s Knowledge Quarter, alongside other life science developments such as Kadans' 5-10 Brandon Road.
According to Glenigan, there are 125 life science projects with plans approved across the UK, with a total value of nearly £4.9bn. The most valuable schemes are in the Golden Triangle with projects in East of England notably exceeding those from any other region.
Supported by the supply/demand imbalance and pushed on by rising build costs, rents have been growing steadily in most of the Life Science clusters over the past 2 years. Rents in London, Oxford and Cambridge are leading the way but other established clusters like Birmingham and Manchester have also seen notable growth. A lack of available stock, increasing construction costs and continued demand are likely to continue to put upward pressure on rental levels over the coming year.
A growing number of regional cities are advancing proposals, including Birmingham, Manchester, Liverpool and Newcastle
Source: Carter Jonas
Source: Glenigan
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When life sciences companies in the UK are broken down further into their specialities, the first five segments account for 44.7% of the total.
Edinburgh
Roslin Technologies Series A $12,287,454
Kynos Therapeutics Seed $8,494,910
Green Bioactives Seed $3,196,553
Glasgow
Dxcover Grant $TBC
CardioPrecision Venture - Series Unknown $TBC
Talking Medicines Venture - Series Unknown $2,028,748
Nottingham
BlueSkeye AI Seed $3,747,028
Upperton Pharma Solutions Private Equity $TBC
Phase Biolabs Seed $TBC
Bristol
Vaarst Series B $19,933,119
Renata Medical Venture - Series Unknown $11,557,978
Industrial Phycology Venture - Series Unknown $2,647,445
Oxfordshire
Oxford Science Enterprises Venture - Series Unknown $298,732,180
Immunocore Post-IPO Equity $140,000,000
Summit Therapeutics Post-IPO Equity $100,000,000
Manchester
F2G Private Equity $70,000,000
Netacea Series A $12,186,568
BlackDice Seed $3,240,000
London
Zappi Private Equity $169,987,873
Verona Pharma Post-IPO Debt $150,000,000
Autolus Post-IPO Equity $149,928,340
Cambridge
Microbiotica Series B $67,685,101
Abzena Private Equity $65,000,000
DIOSynVax Grant $42,000,000
Leeds
MoA Technology Series B $44,161,084
Vet-AI Venture - Series Unknown $TBC
Newcastle
Amlo Biosciences Venture - Series Unknown $3,191,030
Atelerix Undisclosed $575,843
North East Innovation Lab Grant $265,370
Birmingham
Adapttech Venture - Series Unknown $2,940,569
endoscope-i Grant $574,363
CerFlux Grant $100,000
North East
31.63%
Scotland
56.86%
Yorks & Humber
62.93%
East Midlands
12.63%
Northern Ireland
29.35%
North West
62.78%
West Midlands
-3.76%
Wales
48.12%
South East
49.21%
83.19%
South West
20.91%
East
51.16%
-10% - 10% 11% - 30% 31% - 50% 51% - 70% 71% - 90%
London Yorkshire & The Humber North West Scotland East South East Wales North East Northern Ireland South West East Midlands West Midlands
83.19% 62.93% 62.78% 56.86% 51.16% 49.21% 48.12% 31.63% 29.35% 20.91% 12.63% -3.76%
Life Science Employment % change 10-years
$50,402,074
$47,095,181
$4,032,243
$2,162,096
$92,800,103
$3,747,028
$3,608,127,082
$398,304,723
$4,666,019
$1,094,620,436
$39,122,085
London Oxfordshire Cambridge Manchester Leeds Edinburgh Bristol Birmingham Newcastle Nottingham Glasgow
$3,608,127,082 $1,094,620,436 $398,304,723 $92,800,103 $50,402,074 $47,095,181 $39,122,085 $4,666,019 $4,032,243 $3,747,028 $2,162,096
Total Investment Past 12 Months
Deals
Employment
Investment
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Investment, employment & the latest deals
Birmingham Bristol Cambridge Edinburgh Glasgow Leeds London Manchester Newcastle Nottingham Oxfordshire
$5,474,418 $22,000,000 $979,819,780 $65,888,100 $0 $40,152,021 $4,736,502,030 $110,052,626 $19,175,574 $116,900,000 $713,774,670
Begbroke Science Park
Oxford Science Park
Oxford Business Park
Milton Park
Arc Harwell
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The pandemic accelerated demand in the life sciences sector. Attracted by the extensive talent pool and favourable business environment, investors poured an enormous amount of capital into companies operating in the sector. Life sciences companies headquartered in Oxford received just under $1.2 billion in funding in 2021 and nearly $1.1 billion in 2022.
Oxford PArks Overview
The Oxfordshire science park market is one of the most mature in the UK, benefitting from two world-class universities, the University of Oxford and Oxford Brookes University. The University of Oxford again took first place in the Times Higher Education World University Rankings guide for 2022 for both best university overall and best medical school.
Strong collaboration between universities and the business sector is having a significant positive impact on growth. Businesses benefit from world-renowned and leading-edge research and growth capital and an internationally diverse and highly educated population living within close proximity.
Several parks are part of this infrastructure and taking advantage of these dynamics. They include:
Begbroke Science Park (owned by The University of Oxford) Oxford Science Park (owned in a joint Venture by Magdalen College Oxford) Oxford Business Park Milton Park Arc Harwell (previously known as Harwell Science and Innovation Campus)
Three companies received more than $100 million in funding in 2022. Notably, Oxford Science Enterprises received just under $300 million during that period, followed by the biotech company Immunocore ($140 million) and clinical-stage drug discovery and development company Summit Therapeutics ($100 million). Elsewhere, the clinical-stage biotechnology firm MiroBio and OMass Technology, a drug discovery company received $97 million and $95 million, respectively.
Source: Crunchbase, Carter Jonas*
Oxfordshire’s office and lab take-up has been supported predominantly by occupiers from the life sciences sector. Around 50% of total take-up in 2022 was from life science companies, from early-stage start-ups to large and mature firms.
Notable transactions by life sciences occupiers in 2022 include the pharmatech company Exscientia, which expanded its presence in the market with an additional 20,083 sq ft at The Oxford Science Park, while the drug discovery company Omass Therapeutics leased 16,000 sq ft at Oxford Business Park. Several occupiers took space in Milton Park last year, including, Oxitec (13,935 sq ft), Oxicon (11,753 sq ft) and Immunocore (8,748 sq ft).
Strong interest in life sciences and an increase in funding have resulted in many occupiers in the sector expanding their footprint in the Oxfordshire market. Looking at the evolution of tenants at Milton Park several interesting trends have occurred.
Those tenants that scale up take on average 6 years to increase their footprint after arriving at Milton Park. Their property requirement increases on average by circa. 30,000 sq ft, doubling the initial footprint. The property requirements of those tenants who scaled up grew on average by a third, year-on- year.
Notably many of those companies received funding since the coronavirus outbreak. For example, the top 2 companies on the far right of the chart: Adaptimunne and Immunocore received $150m and $140m+ respectively over the past 2 years.
Robust demand amid limited availability means that prime life science park rents have now outpaced those in the city centre, and prime grade A space is now heading towards £55 psf. However, it should be noted that there is significant variation in both the quality and the approach of landlords of laboratory-enabled space, with evidence of fitted lab space exceeding £100 psf.
The pipeline is tight. Availability in the Oxford Market has been limited to a small number of schemes, with grade A office and lab space nearly absent in all but Oxford Science Park.
Although there are several schemes going through the planning process they are not expected to come to the market before 2024 at the earliest, which is likely to put more pressure on occupiers looking for space in Oxford.
With a total of £440 million spent in 2022, office/lab investment volumes in 2022 exceeded those from any previous year and beat the previous record of £360 million in 2021.
The standout deal last year was Life Science REIT’s acquisition of Oxford Technology Park for £183 million in May. The deal included the Park and a £62.7m forward funding component to complete the OTP’s build-out.
Other notable deals in that period include the acquisition of the Gosling Building for £42.5 million by Oxford Science Partners in August and Kadans’s purchase of Windrush Court for £60 million in November.
Source: Carter Jonas*
Source: Carter Jonas, RCA, CoStar
tenants that scale up take on average 6 years from arrival
Substantial
Major
CAMBRIDGE PArks Overview
Cambridge Science Park
St John’s Innovation Centre
Cambridge Research Park
Babraham Research Campus
Granta Park
Cambridge is regarded as one of Europe's leading locations for R&D, buoyed by the University of Cambridge which is ranked within the top five universities in the Times Higher Education World University Rankings guide for 2022. Its R&D sector encompasses a wide variety of firms working in biotechnology, pharmaceuticals, electronics and software engineering.
Key locations for the life sciences sector include:
Cambridge Science Park (owned by Trinity College Cambridge) Babraham Research Campus (owned by UK Research and Innovation) St John’s Innovation Park (owned by St John's College) Cambridge Research Park Granta Park
The last two years in particular have seen tremendous growth in the sector, attracting strong investor interest. Life sciences companies headquartered in Cambridge received just under $1.3 billion in funding in 2021 and more than $350 million in 2022.
Source: Carter Jonas, Crunchbase
In contrast to 2021, there were no companies that received more than $100 million in funding in 2022. Two companies received more than $50 million, however. The developer of human microbiome therapeutics Microbiotica received $67.6 million and the biopharma company Abzena received $65 million. Close to this threshold, the biotech firm DIOSynVax received $42 million in that period.
Healthy demand from tech and life science firms continues to support office/lab leasing activity in Cambridge. In 2022, just over 80% of the office/lab space leased was by technology and life sciences companies, from early-stage start-ups to large and mature firms. It is worth noting that many of the technology companies in the market develop products to support the life sciences sector.
Companies including Illumnia, Nuclera, Source Bioscience and Transition Bio have all taken more than 10,000 sq ft of new space in 2022.
Prime grade A office and lab rents have increased from £41.50 psf in 2018 to £55 psf in the last quarter of 2022, a growth of 32.5%. This growth reflects the strength of demand for business/science park accommodation. We expect this to increase further as several opportunities are under offer for rents in excess of £60.00 psf, which are anticipated to complete in the coming months.
Laboratory floorspace in Cambridge rose from (1.49 million sq ft) in 2011 to about 3m sq ft in 2023. Even excluding the AstraZeneca R & D global HQ, the total additional floorspace was 59% over the period.
Availability in the Cambridge Market has been limited to just a few schemes, with grade A office and lab space virtually absent in all but Cambridge Science Park. The pipeline is also tight, with only around 200,000 sq ft in planning.
In summary, Cambridge currently has no available laboratory spaces for rent, after demand surged by almost a quarter in the first half of this year. As a result, many companies are being forced to lease office and other commercial space, before refitting them as laboratories. The lack of available stock is therefore raising concerns about the city’s ability to capitalise on the surge in occupier demand for life science space.
Cambridge office investment surged to new heights in 2022 to just under £850 million, showing continuing strong investor interest in Cambridge assets.
The acquisition of three buildings at Cambridge Science Park by Brockton Everlast Management for £200 million was one of the largest deals over the past year. In the same park, a joint venture between Stanhope and Cadillac Fairview purchased three units for £85 million.
The acquisition of Capital Business Park by a joint venture of Canada-based PSP Investments and the US-based life science investor Longfellow for £175 million was another notable deal last year.
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Scott Harkness Head of Commercial +44 (0)7860 360821
Matt Lee Head of Science & Technology +44 (0)7815 469 115
