Lack of wet lab space in the Cambridge cluster acts as a constraint on growth

Clustering of life sciences businesses brings important benefits. Collaborations between academic and industrial partners, access to a skilled local talent pool, networking and exchange of ideas, and a strong local supplier base are supported by geographical clustering. But successful clustering can bring its own challenges.

A recent report for Cambridge Ahead by Nick Mansley of Cambridge Real Estate Research Centre highlights concerns over the availability of wet lab space, and particularly incubator space, for life science companies in the Cambridge area. In this highly successful cluster demand is now outstripping supply. Overall, laboratory space has grown by 41% over the five years to the end of 2016. This will expand by a further 500,000 sq ft with the completion of AstraZeneca’s campus in 2018/19. But demand is high and rents are on the increase

In the race for space, start-ups and early stage businesses are most exposed. Early stage businesses are often unable to commit to conventional leases of five or more years. As they grow, the requirements of these new businesses tend to change rapidly. They may then want to expand on or near to their existing sites. And they may be unable to offer financial guarantees or demonstrate a history of profitability.

Multi-occupancy buildings provide the best homes for early stage companies, but the returns that these generate often do not justify new supply, particularly taking account of providing supporting infrastructure and the higher cost of providing wet space.

These issues are not confined to Cambridge. JLL’s 2017 US Life Sciences Outlook identifies access to real estate as a key limitation across US life science clusters. Nine of the top ten US clusters were found to have single-digit direct vacancy rates, with new development failing to keep up. In some of the more pressured locations, investors are converting office space to lab space.

While broader issues around STEM education and housing and transport infrastructure need focused attention over a longer time frame, the report identifies an immediate need to address this shortage of supply to enable the continued success of the cluster. New developments like the recently approved £35m expansion of the Babraham Research Campus will be part of the solution.

Posted by

Tags

Mills & Reeve Sites navigation
A tabbed collection of Mills & Reeve sites.
Sites
My Mills & Reeve navigation
Subscribe to, or manage your My Mills & Reeve account.
My M&R

Visitors

Register for My M&R to stay up-to-date with legal news and events, create brochures and bookmark pages.

Existing clients

Log in to your client extranet for free matter information, know-how and documents.

Staff

Mills & Reeve system for employees.