According to Savills, take-up of science related real estate across the golden triangle of London, Oxford and Cambridge totalled 566,000 sq ft in H1 2024, roughly on par with the five year average. Whilst this is a 19% fall on the 697,000 sq ft recorded in the first half of 2023, this decrease can be attributed to the slowdown in venture capital (VC) investment over the past 12 months as a result of ongoing global economic uncertainty.
Savills notes that 25% of the total deals across the region was for lab space, a fall on the five-year average of 36%. This is due to a lack of large transactions so far this year, however the number of lab lettings below 10,000 sq ft within the Golden Triangle in H1 2024 remains in line with the first half of 2023.
Key deals across the region in H1 2024 saw Ellison Institute lease 27,791 sq ft of fitted lab and office space at at Winchester House and Oxford Nanopore lease 13,000 sq ft of fully fitted lab space at the Sherard Building both on Oxford Science Park. Whilst Welbeck Health Partners acquired 32,000 sq ft of shell and core lab space at The Orion Building at Unity Campus in Cambridge.
Looking ahead, there are a number of sizeable requirements searching for science related space across the region. In Oxford alone this totals as much as 1.1 million sq ft, with confidential requirements seeking up to 185,000 sq ft currently out in the market. Elsewhere in Cambridge, occupiers looking for space totalling up to 225,000 sq ft are touring the city and a further 500,000 sq ft of active or upcoming demand is being tracked in London.
In the capital, Savills has seen 78% of this demand for less than 20,000 sq ft, a sub-sector of the market more likely to be attracted to fully fitted laboratory space. This should see this occupier base benefit from the first wave of purpose built labs being completed at locations including Victoria House, ARC West London, Tribeca, 5-10 Brandon Road, Regent Quarter, 17 Columbus Courtyard, Regent’s Place and Canada Water over the next 36 months.
VC raises also remain a key indicator of likely occupational demand and subsequent real estate requirements and are reflective of market conditions. The first half of this year saw around £900 million of VC raised by companies headquartered in the golden triangle. At this half year stage, this is already 64% of the total level raised in 2023 so ahead of expectations. Savills notes that it is also encouraging that the average VC deal is the highest recorded at around £13 million per deal, which is more than double the 10-year average and well above the five-year average of £7 million. In addition, so far for 2024, over three-quarters of the VC, by value, is later-stage. Two recent examples which are a good indicator of improvement in the VC landscape include Myricx Bio (£90m series A) and Beacon Therapeutics (£130m series B).
Tom Mellows, head of UK science at Savills, comments: “We have certainly seen the current economic head winds, in particular high interest rates and restricted venture capital, subdue occupational activity this quarter across the golden triangle. However, we are seeing more positivity for the remainder of 2024 and into 2025, with active demand and viewing levels picking up in all markets, from SMEs to larger corporates, as well as the re-activation of some larger requirements that were paused 12-24 months ago. All being well, this should translate into greater take-up levels in the second half of the year.”