An imbalance in lab space supply and demand is inhibiting growth in the UK’s Golden Triangle, says Mark Glatman, Chief Executive of Abstract Mid-Tech, and developer of South Cambridge Science Centre.
Known as the ‘Golden Triangle’, Cambridge, Oxford and London have become world centres for an advanced and ambitious life sciences sector. A hotbed of talent, research and development, the UK clearly has the capacity to continue being a global leader in this field – as long as the industry’s lifeblood of funding, which allows the development of world-class lab facilities, is kept flowing.
There is, however, a significant challenge within the sector currently, which is badly inhibiting the Golden Triangle’s growth and ability to attract new life sciences players: an imbalance of supply and demand for top-class laboratory space, which is causing rents to soar.
Soaring rents, inevitably, eat into business’ funding, leaving the sector ill-equipped to attract and retain the best talent. This lack of new lab space also leaves organisations marooned in out-of-date, tired space, that neither supports their work nor represents the future-facing, innovative research these organisations are doing.
Recent figures from commercial property specialists Cushman & Wakefield show that demand for life science space in the ‘Golden Triangle’ has surged to its highest level since 2015. However, whilst take-up of laboratory space has been robust until recently, there is now a real shortage of laboratory space, particularly in Cambridge, which heavily relies on the sector for employment and investment.
This shortage has, naturally, significantly increased rents, which have soared to around £70 per square foot – a new record high, and obviously completely unachievable for many organisations, particularly when they are already constrained by high costs elsewhere in their businesses.
This extreme shortage means we are seeing the lowest supply of new space for some years. This shortage is being exacerbated by a tight and painstaking local planning process in Cambridge in particular, which has held up new development, leaving life sciences firms unable to move or expand in any direction, stuck in unsuitable and dated space that doesn’t attract new talent or inspire existing teams.
To further add to the sector’s woes, there is also now a group of developers sitting on land that they had bought at the peak of the market, for upwards of £7 million per acre, at a time when building costs and interest rates were much lower. These developers continue to hold the land, inactive, while they wait for improved economic conditions, at which point they will begin to build.
But the question looms large – how long will this land remain ‘banked’ for?
As a result, several large-scale laboratory schemes that were earmarked due to be completed in 2025/2026 have been stalled, with developers and investors having decided not to speculatively build.
Those investors still funding life sciences – where we have seen a much-subdued public IPO market as well as reduced early-stage funding – are, of course, keen to see their investment going into research and product development, rather than into expensive new lab buildings. This completely understandable reticence again has stalled the market.
These factors combined have led to the perfect storm: with less available space and exponentially higher rents, the search for affordable lab space is more challenging than ever before. The demand on the very small amount of space currently available is exceptionally high.
According to research from Bidwells, one of the most active agents on the Cambridge market, rents are forecast to increase to £77.50 per square foot in 2025, £81 in 2026, £83 in 2027 and £85 by 2028 – more unaffordable with each passing year.
It is clear that to support the Golden Triangle’s placemaking as a global player in life sciences, changes must be made, and fast. More space must be brought to market, at achievable rents, and this space must be tailored, innovative, thought-through, and have occupiers and their wellbeing at heart.
For instance, Abstract started a laboratory development – where the specification will be equal to, or better than, the very best competing buildings – in Cambridge in September 2023. Work is well underway, with the structural frame of the building now well advanced.
Our first phase of 140,000 sq. ft. of labs will be completed by the second quarter of 2025, with a second phase of 40,000 sq. ft. to follow approximately 18 months later.
Vitally, thanks to strategically and well-timed land purchases, this lab space will be available at a much more reasonable cost, meaning vital funds can be invested back into research and development.
Abstract may also consider direct investment into life science organisations, understanding the challenges of sourcing funding.
Often, it takes one change of strategy to change the course of the market. We hope that by bringing affordable, world-class space to Cambridge, we will play our role in supporting the Golden Triangle as it competes to bring employment, investment and globally important research and development to the UK.
