RACE TO MARKET
Is lack of space a real concern?
Oxford has what many would consider an enviable pipeline of appropriate real estate – especially in life science - so the panel considered whether lack of space is a real concern.
Jon Silversides of Carter Jonas has spent 27 years working in Oxfordshire.
He talked about having visibility of around 4.7 million square feet of innovation space that could be delivered over the next decade and beyond. “Our market has been on steroids for the past 3 years, with an insatiable appetite for opportunities and we are now starting to see the fruits of this activity in the form of genuine lab stock coming forward. It’s a hugely interesting time.”
Our market is on steroids, with an insatiable appetite for opportunities. It’s a hugely interesting time.
That said, he pointed out that Oxfordshire is only expecting delivery of 150,000 square feet this year and offered the observation that nowhere is immune to economic headwinds.
One of the biggest drivers of demand for innovation space is the ability of R&D businesses to attract venture capital investment that allows them to grow.
The UK has at times produced stellar figures, but UK biotech investment got off to a slow start this year, with the amount raised in the first quarter dropping 39% year on year, according to figures from BioIndustry Association (BIA).
Some £295 million was raised by UK life sciences companies in the first quarter, compared with £485 million for the same period of 2022. The BIA report also noted that no UK-based biotechs launched an IPO during the period.
Sarah Haywood, of Advanced Oxford, a membership organisation for knowledge-intensive businesses and organisations, acknowledges that the figures are compelling. VC funding is key for Oxfordshire, the fuel that powers early-stage business scale-up.
“We have a community where the strategy has been to grow our own. So businesses born in Oxfordshire, grown in Oxfordshire, hopefully retained in Oxfordshire.”
We have a community where the strategy has been to grow our own. So businesses born in Oxfordshire, grown in Oxfordshire, hopefully retained in Oxfordshire.
She contrasted that with approaches in other regions which deploy aggressive inward investment strategies to attract big pharma – whilst also acknowledging that Oxfordshire does have examples of major occupiers arriving.
Daniel Pagella, of ARC Group, a global group that, in the UK, is developing innovation-based clusters in London and Oxfordshire, also picked up on the importance of VC funding for Oxford. “Our enquires are pretty healthy but there was a dip in [biotech] funding last year.”
Our enquiries are pretty healthy but there was a dip in biotech funding last year. We have potential occupiers wanting to make that next step, but they have got the challenge of getting that funding over the line.
In life science he felt the issue was post-Series B funding, as opposed to investment in earlier stage start-ups.
The Series B round generally takes place when the company has accomplished certain milestones and is the precursor to Series C, where biggest calls of VC funding might be made.
“We’ve had conversations going on now with [potential occupiers] for two or three years where they are just about managing to make it work in their current facilities,” Daniel Pagella said. “They really want to make that next step, but they have [got the challenge] of getting that funding over the line.”
Jon Silversides echoed the point: “Every year these buildings are getting better and better. But we do sometimes see people sitting on their hands.”
ARC is owned by Brookfield, one of the biggest names in real estate and an alternative asset manager with over $690 billion in property in its portfolio.
They are developing new science buildings at the 700-acre science park at Harwell, south Oxfordshire.
The site is formed around a community of some 6,000 innovators in over 200 businesses focused on energy, health tech, space, and quantum computing.
One of the buildings will be for Moderna, another vaccines pioneer and a global leader in a range of therapeutics.
The MITC development will encompass a research, development and manufacturing facility, providing the UK public with access to cutting-edge mRNA vaccines for a wide range of respiratory diseases.
Construction work is due to stage later this year and the MITC is expected to become operational in 2025.
Originally founded in 1946 to help tackle the energy crisis and advance nuclear technology, Harwell is a flagship for Oxfordshire and exemplifies why the most valuable science parks are different to other real estate categories such as office and industrial.
The belief is that innovation-based companies have the best chance of succeeding when they are part of a community.
This ecosystem needs to feature a number of prerequisites, including a critical mass of research and innovation talent, close links to academic institutions and scientific facilities, along with a blend of large and small businesses, which often trading between themselves. Harwell has all these attributes and many more.
The anchor occupiers include publicly funded scientific infrastructure such as the National Quantum Computing Centre and the Central Laser Facility, along with the European Space Agency, innovative private sector organisations like Oxford Nanopore and Astroscale alongside teams from 30 UK universities.
