Life Sciences: Greater competition, the cluster expansion, and the rise of bio-medical manufacturing

Looking to 2022 we predict three trends will come to the fore:

1. There will be greater competition in the life sciences real estate sector. Traction with institutional investors and property developers will gain further momentum in 2022, despite the high barriers of entry to owners, given the technical requirements of the space and knowledge needed. As well as the sector’s resilience to the pandemic, it also enjoys secular growth characteristics that make it appealing to investors. However, one of the key attractions is a current shortage of supply, particularly for lab space and space for start-ups and scale-ups. As well as outright acquisitions, real estate groups will look to create life sciences platforms, strategic joint ventures, minority interest transactions and/or recapitalisations of existing life sciences product. Repurposing assets will be viewed by some as a viable method to achieve superior returns with space being available for rent potentially years before space that is currently under construction, or proposed ground-up development is completed.
2. Increased public and private investment and new anchors such as research institutions, will drive the growth of life sciences clusters across the UK. This is likely to play out in the form of regional centres of excellence in high-growth fields of life sciences or focused around grand challenges like data driven healthcare and healthy ageing. These centres of excellence should be inter-connected and collaborative, with the potential to create “superclusters” as well as building a compelling joined-up UK offering.
3. Bio-manufacturing is an emerging growth spot within life sciences real estate. On-shoring and domestic supply chain adjustments for vaccine makers and pharmaceutical companies, are expected to drive demand for life science manufacturing and distribution facilities. Risks to sector growth include labour shortages, a lack of suitable scale-up space and affordable incubator space and any deceleration of the Government’s R&D and levelling up strategy.