April 7, 2020

PropSci in the UK and Europe: The Convergence of Life Sciences and Real Estate

“Life sciences” refers to the application of the disciplines of biology and technology to improve human health.  This umbrella term covers industries operating in the biopharmaceutical, medical technology, genomics, diagnostics and digital health spaces, and includes end products (including drugs, medical technology, diagnostics and digital tools) which use the latest technology to enhance the efficiency of modern healthcare delivery.

In terms of real estate, life sciences companies have specialised technical building requirements to cater for research and development needs (e.g., bespoke laboratory space, higher mechanical/electrical/plumbing requirements, hazardous waste disposal facilities, etc). From a real estate developer’s perspective, these requirements can often be costly to satisfy. As a result, life sciences buildings in the UK and Europe have traditionally been located in out-of-city centre locations – the quid pro quo being that developers and landlords can generate a higher level of income over cost from traditional office and residential tenants, compared to life sciences tenants. 

Funding boom

Life sciences globally is a trillion-dollar industry, traditionally dominated by established global companies.  established biopharma companies, regularly top R&D spending, even when compared to global tech companies (e.g., Roche, Johnson & Johnson, Merck and Novartis and Pfizer outspent Facebook in 2018).  However, as R&D becomes more expensive, companies are looking for more efficient ways of deploying their capital to get more value from their programmes.  This includes outsourcing, partnering, development of innovation teams and/or selling non-core assets.

In this changing environment, more and more venture capital is being deployed to fund start up and early life science ventures, including by specialised venture capital funds, as well as more developed life sciences companies, either through partnerships or corporate venture capital.  In 2018, venture capital investment in life sciences exceeded USD 11 billion in the U.S., and over GBP 1 billion in the UK. 

In the UK, BioCity (a UK-based business incubator and researcher) notes that in the past five years before 2019, “the life sciences industry has experienced a period of growth not previously seen this century”.  Meanwhile, the UK BioIndustry Association in 2019 noted that “the number of active UK biotechnology businesses in the field of research and experimental development has soared by 65% in just over three years”. 

While COVID-19 has dramatically altered the investment landscape in the short term across all industries, there is confidence that the life sciences industry is resilient, and growth trends will continue along the same trajectory once the status quo resumes. 


Within the UK, the market is dominated by the Golden Triangle (Oxford, Cambridge and London).  Within this triangle 82% of all UK life science investment happens.

While start-ups in other industries have favoured migration to flexible or shared office space, European life sciences start-ups are struggling to find the specialised space they require to meet their needs.  Many startups, who cannot afford to build their own laboratory space or occupy the larger science parks designed for established players, have favoured working relationships with academic institutions – universities provide access to costly R&D infrastructure and talent, and in return, receive commercial upside and credibility when a venture becomes successful.  However, this is not without its challenges – companies fail to develop a corporate culture, there are potential VAT implications for universities, and universities are often tightly pressed for space and cannot bring corporates in at the expense of academics.

In the UK, even those companies who are supported by academic institutions are starting to outgrow their initial laboratory space at an exponential rate. With limited supply, these companies are prone to seek a new home in life-sci-hubs abroad (e.g., Cambridge and Boston in the U.S.), which have both the specialised real estate and talent pool supplies (these two being interconnected) to support expansion, further innovation, and the attraction of new capital.  While supply is a problem for the life sciences industry in the UK, it is also an opportunity for life sciences real estate investors.

Real estate trends and opportunities

To capitalise on the boom and opportunity in life sciences, many high profile institutional real estate investors have recently announced the launch of specialty life sciences platforms to target investment in this sector.  For example, Tishman Speyer (one of the world’s leading developers, owners, operators and asset managers of prime real estate) and Bellco Capital (an investment firm founded by biotech entrepreneurs) formed Breakthrough Properties in 2019, a platform to develop and operate life science properties in key centres around the world to support innovation in the life sciences space.

Dan Belldegrun, CEO at Breakthrough Properties comments:

Despite unprecedented growth of the life science sector and robust capital investment, entrepreneurial scientists and life science companies around the world struggle to find space that supports the development of life-saving therapies for devastating diseases. The Breakthrough Properties platform, powered by our distinctive ecosystem, is designed to not only address this dearth of bespoke laboratory space with best-in-class environments, but to provide services that support companies as they advance their research and scale their businesses. Our mission at Breakthrough is to reduce pain points for life science companies and allow researchers to focus on what really matters – coming up with solutions to the world’s most pressing human health issues.


ScaleInstitutional investors have typically preferred to develop larger life sciences parks, citing economies of scale, as well as the success of U.S. life sciences clusters in Cambridge and Boston as prime examples of the appeal of concentrating talent and collaboration near academic institutions.  In the UK, White City Place is an example of a scaled transformative European development which has succeeded to attract both established life sciences companies and start-ups due to its specialised buildings, Central London location, and proximity to Imperial College London.

Flexible officeForward thinking developers and investors are also starting to follow the lead of traditional flexible-office space providers, and are exploring smaller scale, shared and flexible laboratory space in central metropolitan locations.  Given the technical nature of lab space, developing truly flexible space that can be adapted for different start up lab needs and niche regulatory requirements requires innovation.  However, the rewards for developing a template that can be replicated on mass can be significant, and can translate into the higher valuation multiples that traditional co-working spaces have achieved in short time.  In the U.S., such smaller scale “incubator” laboratories are gaining popularity – for example, Alexandria LaunchLabs has developed an “incubator” lab and office space in New York’s East Manhattan as well as Cambridge’s Kendall Square, which specifically aims to create a community of biotech startup tenants. These spaces promote well-being and an agile lab space suitable for creative thinking, incorporating natural light and more open spaces to differentiate itself from the cliché of dark basement labs. In addition, unlike a traditional landlord, Alexandria LaunchLabs is also offering tenants access to strategic risk capital, which can be used to fund the early-stage ventures of their start-up tenants.   

James Sheppard, Head of Life Sciences at Cushman Wakefield (London) comments:

The life science market is driven by talent and proximity. Companies want to be near science and digital talent, which increasingly means competing with the likes of Amazon & Google. As such, life science companies are increasingly looking to urban locations for talent and a competitive edge. Within urban locations they are looking to co-locate with academics, businesses and clinician (ABC’s of life science real estate). This is a trend seen from SME’s to global pharma.

Life science biotechs generally look at 4 aspects of a location when assessing its viability, these are:

  1. People: from graduates to senior executive talent – is there an established base of talent in the area?
  2. Funding: early stage venture capital companies often plan hands on roles in biotechs and want their portfolio companies based near by
  3. Space: the right type of space, in the right quantities with the right flexibility of licence/lease
  4. Professional services: early stage companies do not exist in isolation and need the support of a diverse base of professional service companies to support their growth

For landlords three challenges are often cited in the development of laboratory space:

  1. The cost of building/retrofitting laboratory space
  2. The evidence of demand – who is going to occupy the space?
  3. Operations – who is going to run the space for us?

However, with the right advice from the earliest stages, many of these challenges can be mitigated and avoided. The UK market is growing exponentially and the opportunities are vast and diverse.


The intersection and opportunities between life sciences and real estate are both evolving and converging. Goodwin’s market leading PropSci practice brings together its Life Sciences and Real Estate practices to provide companies, investors and consumers with global reach, local market insights and strategic advice to allow them to navigate the challenges and opportunities of this evolution.