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With a strong growth potential and a distinct social angle, the life sciences sector is developing at a fast pace, increasing investors’ interest in securing a spot in this forward-looking niche. But access is selective, and industry expertise isn’t enough to be successful.

The UK life sciences sector is strategically important to the UK economy, and its social angle has the potential to improve the quality of human life. The macro-drivers behind the sector’s growth, such as demographic trends, a surge in R&D spending on new treatments, and AI advances among others, have contributed to increasing investors’ appetite towards this fast-growing niche. At the same time, the Golden Triangle (comprising Oxford, London, and Cambridge), is a renowned cluster for academic excellence, which has been a major draw for VC capital entering the European market for the first time, and makes this combined region the third largest recipient of VC funding after Cambridge Massachusetts and Shanghai.

The supply of real estate within the Golden Triangle has been unable to keep pace with the demand which is being created from this inflow of capital into life science companies. There is currently around three million sq ft of unsatisfied laboratory demand in the region, against an existing availability of just 50,000 sq ft. Although many schemes are now being marketed with a life sciences angle, few can actually convert into the wet laboratory and manufacturing space which is in high demand. Regulations for assets handling biohazardous material are stringent, and traditional office space without specialist ventilation systems cannot be retrofitted to provide this space. Location is a crucial point too, as life sciences companies usually require a proximity to a university, hospital, or employer.

We anticipate demand for life sciences real estate to continue to outstrip supply and support strong rental growth for schemes which can deliver the right space in the right location for these fast growing occupiers. We also believe GMP will be an increasingly important component of the market, as the companies receiving VC funding today get closer to commercialization and will need to have manufacturing facilities in place to progress through the clinical trials.

Aside from the positive financial metrics, real estate investors can play a key role to play in helping facilitate the growth and expansion of this sector by providing labs and GMP space that are fit-for-purpose, well located and environmentally friendly.

But how can investors access this market, and what are some of the key issues to consider?