The Future of Life Sciences Real Estate in Cambridge

What factors have accelerated the growth of life sciences in Cambridge?

Since the turn of the millennia, the office and the laboratory stock for commercial businesses in the city has more than doubled in size, and that just shows you the kind of demand for space.

In Cambridge, we also have the ‘university effect’ - a world class university which is strong in STEM and in particularly Life Sciences, with a number of spin-outs who want to locate here. That’s driven growth over the last 20 years.

During the pandemic, one thing that was clear was that we needed the life sciences and medical professionals to come up with a solution – which thankfully, they did.

After an initial pause in the real estate market for a few months, the following 18 months saw demand grow fourfold, to a level about 1.2 million square foot of laboratory demand in Cambridge from the position of around 300,000 square feet pre pandemic.

1.2m sq ft is a figure we’ve seen before. We were actually reaching those levels in 2013 and 2014, so it's not unheard of. But interestingly, we're now seeing demand spread across a diverse range of different occupier sizes, driven by the pandemic and focussing spending on life sciences.

Businesses of all sizes have access to funds to scale-up, and the places they want to do it to attract the local, national and international talent they need are in places such as Cambridge.

How has the pandemic changed office & lab requirements?

Although there is a lot of work you can do at home, for some work you do need laboratories, and you also need collaboration. Well designed buildings in this sector draw out those chance encounters that encourage the sharing of ideas and promote health and wellbeing.

Businesses are making labs work harder – with a trend for 60:40 lab:office ratio. Agile working is here. We've also undertaken a fairly large piece of research called Life Sciences 2030, on the sub-sectors of life sciences where we expect to see growth, and the implications on real estate of increased use of new technologies such as AI, robotics etc. Spaces will need to be flexible and adapt to meet changing occupier demand.

How does Cambridge compare to other cities in the Golden Triangle?

Cambridge is ahead of the pack in terms of the competition. We've delivered north of 3 million square feet of commercial lab space, so it's a very developed market which is becoming more sophisticated in how that is delivered. Oxford is also growing rapidly and trying to deliver space at pace.

In Cambridge, life science businesses make up close to 50% of all office and lab occupancy. If you go to London, you have more competing sectors for the space. And when those other sectors are performing strongly, they’ll probably take the space earmarked for life sciences because it will be easier and quicker to deliver.

How critical is the shortage of lab space in Cambridge?

Well, the lab shortage is pretty extreme.

As it stands today, if you have a business needing fitted lab space immediately, there is nothing available. But the cavalry is arriving… Six months ago, we had no buildings on site; now we have three buildings being constructed which will start to deliver high quality purpose-built laboratories from 2023-2024.

But if you look at those which are committed to be delivered, that will only deliver space for about a third of the demand that we have.  There are buildings which will be recycled during that time as well, but it isn't enough, we need more.  

In these more challenging economic headwinds it’s important we can follow through with the developments that will come forward in 2025 and 2026.  

Is there enough land for these developments in Cambridge?

The Planning system in Cambridge recognises the value of the life sciences, the wider R&D sector, and the importance of clusters. It's one of those industries where people want to locate next to other like-minded businesses.

Being on your own, where you’ve got a monopoly isn't actually a very good thing to do, because you would be so reliant on getting those crucial high-skilled workers. You need to be where they are and where they're living.

Policy is here to support it, but the sheer volume of floorspace coming through right now has caught a few people out. So, a lot of the developments coming through are on previously developed land - they are true windfall schemes in good locations in the city. It’s important the authority ensures it’s at the right scale and has the right impacts.

Are there any local challenges to this fast-growing sector?

The councils are about halfway through preparing, for the first time, a joint Local Plan between Cambridge and South Cambridgeshire. This is helpful because South Cambridgeshire fully rings around Cambridge, so there’s a lot of synergy between the two and how they operate in practice.

The council has a difficult role of balancing progressive and protectionist values in the local area. But sustainability is the Number 1 focus – and this is driving better decisions. Water usage is really topical, and a wider structural issue that the water authorities need to deal with. Transport is another challenge at the top of the list, with a real push for sustainable transport measures. Within Cambridge there is also an anti-poverty agenda. There is a lot of wealth in the city, and there are policies in place to try and allow everyone to benefit.  The local life sciences community is really engaged in these positive discussions, so it would be beneficial for the council to embrace the sector, so it’s part of the solution. 

The council has expressed they’re engaging with economic growth and going through one of their ‘higher scenarios’ as they describe them, but what we’re witnessing is demand above their highest scenario, so the big debate is: how much will the council want to embrace the floorspace demand?

We hope they will, because those delivering this floorspace are much more progressive thinkers now, and really want to make their buildings sustainable, delivering for environment, health and wellbeing.

Is there the infrastructure in Cambridge to support all these new jobs?

Unequivocally, it's about sustainable transport, and many of the companies we’re working with genuinely want to engage with this and contribute to these solutions.

On housing, statistically Cambridge is one of the most unaffordable places to live, when comparing house prices with salaries. But in the growing R&D sector, a lot of the available jobs don't need a university degree and yet they pay very well. So a low skilled job in R&D will pay better than a low skilled job in many other sectors. This means strengthening this sector could be part of the solution and support the local anti-poverty agenda.

Joining Oxford with Cambridge with the East West Rail is important because we compete in a global marketplace and Cambridge on its own, despite its growth, is still quite small on a global scale when it comes to life sciences.  

Boston has 40 million square foot of lab space; we’ve got just over 3 million square feet of commercial lab space.

Clearly, we are going to need more employees and they need much better mass-transit systems into their places of work, so EWR will be really important for bringing workers into Cambridge and Oxford respectively.

Also, it's not just about Oxford and Cambridge, it’s all the places in between that could economically benefit. There's a real opportunity for the businesses that don’t need to be at the very epicentre of the science clusters – mid-tech, and manufacturing for example.

What are the barriers and potential risks to the future of the life sciences sector in Cambridge?

Initially, we need to ensure we've got space for small businesses to seed and scale. Without those, we're not feeding the hopper for the scaling and growing businesses of tomorrow.

At the moment, businesses are very happy to come to campuses for two or three years, but we need to make this place sticky for them to want to stay and grow.

Cambridge can offer a very good lifestyle, but how do we compete against our global competitors on that front?

Larger businesses considering Cambridge as their home currently have nowhere to go and that is a challenge. We are competing on a global market and if other centres abroad can deliver for them within a much shorter timeframe, we run the risk losing them from the UK.  

What would be your advice to developers that are trying to break into Cambridge?

I think we need creative environments, which will make people want to come here, so it’s not just a place of work - it needs to have amenities, improve their life and health, be well-connected. And try to deliver it quickly, as we have an immediate lack of space available for these businesses who want to grow.

The talent is going to be demanding for ever-greener and ever-higher quality environments so developers need to continue to raise the bar as they come forward. Embrace sustainability and inclusivity – create engaging buildings with large welcoming windows, so young people can see scientists at work and hopefully inspire them into the sector.

We are already a leading global player in this field and we will attract so much global investment if we can enable them to put their money here – giving wealth and opportunities to everybody within this society. We need to be better at communicating the wider societal benefits of this to the local population.