It’s a well-known fact that every recession has its winners and losers. Social distancing guidelines, introduced in March to slow the rate of Covid-19 infections, have exacerbated structural changes in retail by speeding up the rise of e-commerce.
At the beginning of July, UK high-street retailers slashed more than 12,000 jobs in just 48 hours. Household names like TM Lewin, John Lewis and Harrods have announced mass lay-offs.
The leisure and hospitality industries haven’t fared much better. The government was forced to reduce the two-metre rule in June after Tory MPs warned that it could claim 3.5 million jobs across the sectors.
But while certain sectors have struggled in the wake of the pandemic, others have thrived.
The coronavirus crisis has put the UK’s life sciences industry under the spotlight – for all the right reasons. The biomed sector has continuously proven its value to the UK over the last few months – not only in terms of healthcare, but also economic contribution.
Drug maker AstraZeneca (AZ), who is spearheading efforts to find a coronavirus vaccine from its Cambridge-based headquarters, has seen its share price skyrocket by 42 percent since the March stock market crash, making it the FTSE 100’s most valuable company. The company has reached an agreement to supply Europe with 400 million doses of Oxford University’s vaccine.
AZ’s research and development (R&D) efforts not only bring much-needed investment to our shores, but in the longer term creates highly skilled jobs for an economy which is certainly going to need them.
But it’s not just giants such as AZ who are making tangible contributions to UK plc. In total, the UK’s life sciences sector contributes over £74 billion to gross domestic product (GDP) each year, while supporting 250,000 jobs.
The UK government has also made clear that the sector is of huge strategic importance. In 2017, the government asked Oxford University’s Sir John Bell to deliver the Life Sciences Industrial Strategy to lay out the life sciences sector’s vision of “how the UK might exploit its existing strength to increase the pace of economic growth in this sector.”
In addition, the UK government is increasing its current level of R&D expenditure from 1.7 percent of GDP to 2.4 percent over the next five years, equivalent to £22 billion.
But, with private sector investment being crucial to leveraging this, how can real estate help capture the huge potential of UK life sciences?
Put simply, and at the risk of sounding like Boris Johnson, the real estate sector must build, build, build.
The UK’s life sciences sector has a critical mass in the knowledge economies of London, Oxford and Cambridge – better known as the Golden Triangle. Bidwells, a property consultancy, has forecast that up to 20 million sq. ft. of new lab and office space will be required in the region within the two decades to keep pace with soaring demand, twice the volume of the previous 20 years.
Without the space to do the science, investors will not invest. Taking into account Bidwells’ estimation that the region will contribute over £100 billion a year to the UK economy by 2050, this could be a huge missed opportunity.
Secondly, developers and operators of laboratories must deliver the right spaces and services.
BioMed Realty, who recently completed the lease-up of its 100,000 sq. ft. landmark scheme at the Babraham Research Campus in Cambridge, provides flexible and fully-fitted premium lab and work space for its occupiers – which include the likes of AZ and Gilead – allowing fast-growing businesses to move in and focus solely on the science and research.
This is of huge importance as a lot of early stage scale-ups do not have the time, experience or resources to effectively deal with real estate management.
Looking ahead, developers and operators must take a long-term view of development and operation so that they provide the perfect ecosystems for their occupiers to successfully scale up.
The UK must be bold in its ambitions for life sciences. Lessons can be learnt from the US, where world-leading knowledge-based economies, such as those found in Silicon Valley, have been created.
Real estate has a crucial part to play, especially in terms of leveraging private investment, because without the space, you can’t have the science.