Last year’s rush of investment has not yet translated into an expanded life science footprint in Europe, with employment rising by only 5% over the course of 2020, Colliers says.
In a report on the sector, the agent claims the mismatch between financial and physical expansion reflects, among other things, a limited supply of the necessary specialised, multi-functional buildings.
‘Life science occupiers typically require highly-specialist and customised facilities,’ noted Andrew Hallissey, Colliers’ executive managing director, EMEA Occupier Services. 'The development community needs to ensure they are at the cutting edge of building innovation and deliver smart and sustainable product for this rapidly growing sector. Location will continue to be key given the clustering characteristics of the sector but given the industry’s robust growth prospects, those laying the ground for the sector are likely to find no shortage of occupier demand.’
But he felt in the end, there would be enough product to satisfy demand: ‘In time, supply will catch up with demand, especially as larger investment managers expand into life sciences real estate assets and development. Colliers expects investment volumes to rise from the 1% annual average of the last cycle to closer to 5% in this new expanding investment cycle.’
The UK remains one of Europe’s biggest draws for life science investment, ranking third behind Ireland and Zurich - although withdrawal from the EU has ongoing implications for patterns of investment, given unanswered questions about its impact on mutual recognition of clinical trials, product safety and other aspects of regulation.
L&G and Bruntwood are among the key players in the life science space, having formed a JV to invest and seeding the initial portfolio with properties worth £360 mln (€421 mln), comprising 1.3 million ft2 across seven assets. The JV’s growth target is to reach 6.2 million ft2 over the next 10 years. BioCity Group and Oxford Properties are also making major investments.